Gap Inc. announced it will cut 1,800 jobs as part of a restructuring and cost reduction plan. The layoffs will take place in senior (corporate) positions and will affect personnel working at the headquarters in San Francisco.
According to a document filed with the Securities and Exchange Commission (SEC):
The Company's management committed the Company to a restructuring plan (the "Plan") that includes a reduction of the Company's headquarters and upper field workforce by approximately 1,800 employees (50%).
The company - which also owns Old Navy, Banana Republic and Athleta brands - thus joins a large number of companies - Meta, Twitter, Walmart, PayPal, Amazon, Disney, Goldman Sachs, and Google - that have been downsizing for months due to the economic crisis. By January 2023, Gap had a workforce of about 95,000 employees.
Gap's restructuring plan
Bob Martin, the company's interim chief executive officer, indicated that it was "taking the necessary steps to remodel Gap Inc. for the future" and "simplify and optimize its structure and operating model" in its brands:
These changes include consistent brand leadership structures (...) with the objective of flattening the organizational structure to improve the quality and speed of decision-making while reducing overhead costs.
In connection with the restructuring, the company estimates "that it will incur total pre-tax costs of between $100 million and $120 million in connection with the plan, consisting of employee-related costs of between $75 million and $85 million and consulting costs of between $25 million and $35 million."
The company expects that the actions related to reducing the workforce will result in annual savings of approximately $300 million (before taxes).
Previous layoffs and drop in sales
In September last year, the company eliminated 500 corporate jobs in San Francisco and New York. The cuts came shortly after the company reported that it planned to reduce costs ($250 million) and increase profitability.
In the 2022 fiscal year, its net sales fell 6% to $15.6 billion.