Gap laying off 1,800 employees in move to ‘improve quality and speed’ of decisions
Gap is downsizing its workforce for the second time in less than a year.
The apparel retailer said in a SEC filing that it plans to reduce its headquarters and “upper field” workforce by approximately 1,800 employees. (Upper field refers to Gap employees with leadership titles outside of corporate offices.)
The cuts, which are expected to be completed by the end of the first half of the company’s current fiscal year, are roughly three times the number of corporate jobs that Gap eliminated in September. The company has a total workforce of approximately 95,000, which includes about 8,500 employees spread throughout its corporate offices.
“We are taking the necessary actions to reshape Gap Inc. for the future — simplifying and optimizing our operating model, elevating creativity, and driving better delivery in every dimension of the customer experience, said executive chairman Bob Martin, who was named interim CEO of the company in July.
The retailer is downsizing its workforce as it struggles to return to profitability amid slumping sales and declining discretionary spending. The new round of cuts are in keeping with a plan that Gap detailed in its March fourth-quarter earnings release in which it said it would move “to further simplify and optimize its operating model and structure, including taking actions such as “decreasing management layers to improve quality and speed of decision making, as well as creating a consistent organizational structure across all four brands focused on elevating its product and customer experience.”
“These actions are estimated to result in $300 million in annualized savings, of which roughly half is expected to be realized in the back half of fiscal 2023,” the company stated. “These actions will incur severance and other related costs which the company anticipates adjusting out of its reported operating and net income.”
In the earnings release, the company also announced the departure of Mary Beth Laughton, president and CEO of Athleta, and said it was eliminating the role of chief growth officer held by Asheesh Saksena. In addition, Sheila Peters, chief people officer, will leave the company at the end of the year.
In the filing, Gap said that it will incur approximately $100 million to $120 million in aggregate pre-tax costs in connection with the layoffs, which consists of approximately $75 million to $85 million in employee-related costs and $25 million to $35 million in consulting and other associated costs. Nearly all of the costs are expected to be incurred in the form of future cash expenditures.