Image source: The Business of Fashion
The Gap is one of the best-known clothing brands in the industry, but has suffered significant losses alongside other clothing companies.
This year, inflation has dealt a severe blow to the apparel retail sector, forcing many to make tough decisions and let employees go.
While other companies fired their employees at the store, The Gap made the important decision to cut the company’s jobs.
The report
More than 500 corporate jobs are disappearing from the business, which is just one of the factors facing the retailer.
According to several newspapers, the cuts will be accompanied by a series of layoffs and open positions in the Gap offices.
In the United States, offices in New York and San Francisco are threatened with layoffs, while the same is happening throughout Asia.
According to Wall Street, the layoffs began recently, affecting about 5% of Gap’s 8,700 employees.
Read also: FedEx cuts sales forecast by half, warns of global recession
Impact on sales
The layoffs come months after Gap reported weak first-quarter results.
Most of the sales have escaped the flagship brand and the famous Old Navy chain.
In July, The Gap reported that CEO Sonia Syngal would step down after less than three years in office.
An interim CEO will later take her place while the company searches for a permanent replacement.
Response to the layoffs
GlobalData director Neil Saunders penned an analyst note, writing that the decision was the right call.
He cited the company’s declining sales and shrinking retail presence as the contributing factors.
Saunders also noted that Old Navy (The Gap’s most popular chain) was not as strong as it was in boosting company profits.
“Traditionally, Gap could rely on its former Navy banner to mask some of the inertia in other parts of the business,” he wrote.
“However, with the division facing supply chain problems and weakening demand from the household segment, the whole company is very vulnerable and must take stricter measures to satisfy investors and present better numbers in the second half of the year.
Read also: Several clothing retailers have shared bleak sales reports, including American Eagle
Other issues
Last week, rapper Kanye West announced that he would end his two-year association with the Gap, citing “significant non-compliance”.
Ye claimed, among other things, that the retailer had violated their partnership by not opening Yeezy stores and not distributing his clothes, a deal they had initially reached.
Gap (GPS) also confirmed that it was closing the partnership.
Meanwhile, Gap shares fell nearly 3% in trading on Tuesday, while shares fell 50% over the year.
Reference:
Gap is laying off 500 corporate employees as challenges mount
