gap inc
Geographic Positioning System -1.73%
According to people familiar with the matter, about 500 jobs at the company will be cut in a bid to trim spending at the apparel retailer as sales and profits plummet.
The jobs are primarily based at Gap’s main offices in San Francisco and New York, as well as in Asia. The company is laying off employees and eliminating positions currently open in a number of departments. Some employees have been informed of the layoffs in recent days, the people said.
The mall retailer has struggled for years with slumps in sales at flagship brand Gap and more recently problems at the Old Navy chain, which accounts for more than half of total sales.
Sales at Old Navy suffered a setback this year after an attempt to make dress sizes inclusive backfired, leaving it with surplus merchandise. The company is seeking a permanent chief executive following the resignation of Sonia Syngal in July.
Last week, the company announced it was ending a partnership with Kanye West to make clothing under the Yeezy Gap label after Mr. West accused the company of violating the 10-year agreement.
The job cuts are unrelated to the settlement of the partnership with Yeezy Gap. Gap plans to launch Yeezy Gap items it has in the pipeline, meaning the label won’t go away immediately, people familiar with the situation said.
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In August, Katrina O’Connell, Gap’s chief financial officer, told analysts the company would look at ways to reduce expenses and overhead, including a pause on planned hiring.
Gap employed about 8,700 people at its headquarters as of January 29, according to its annual report. In all, the company had 97,000 employees, most of whom were hourly workers in its branches.
The job cuts at The Gap follow recent corporate layoffs at other retailers, including Walmart inc,
Abercrombie & Fitch co
and stitch fix inc
Also Bed Bath & Beyond inc
has announced it is downsizing its corporate ranks amid a deep sales slump.
Retail sales have slowed from last year’s rapid pace as consumers spend less on clothing and home goods and more on travel and dining out. Inflation makes groceries, gas and other items more expensive and leaves less room in budgets for non-essential goods. That has led to stockpiling at many retailers, hurting profits as they offer discounts to clear stock.
Gap, which also owns Banana Republic and Athleta, reported a loss of $49 million for the three months ended July 30, compared to a profit of $258 million a year earlier. Net sales declined 8% to $3.86 billion. Sales excluding new stores opened or closed fell 10% over the period.
Its shares are down about 60% over the past year through Monday’s close. Board member and former Walmart executive Bob Martin has assumed the role of interim CEO as the San Francisco-based company searches for a new leader.
Write to Suzanne Kapner at [email protected]
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