Gap, the US Fashion Company Facing Deficits, Lays Off Another 1,800 Employees

Gap Inc., a major fashion company headquartered in San Francisco, California, announced on the 27th (local time) that it will lay off 1,800 employees as part of a restructuring.

[Image source=Reuters Yonhap News]

Interim CEO Bob Martin stated in a press release that "these measures are necessary for the company's reorganization for Gap's future," announcing the layoffs. This follows an earlier reduction of 500 employees in September last year.

This additional restructuring is interpreted as a decision due to continued poor performance. Gap recorded annual net losses for three consecutive years from 2020 through last year, and also posted a net loss of $273 million in the first quarter of this year. Interim CEO Martin explained, "We will restructure Gap by simplifying and optimizing the operating model, enhancing creativity, and providing better service in every aspect of the customer experience."

Founded in 1969, Gap is well known not only for its eponymous flagship brand ‘Gap’ but also for Banana Republic, Old Navy, and Athleta. The Wall Street Journal (WSJ) reported, citing sources, that prior to the layoff announcement, leaders of each brand had been conducting extensive reviews aimed at eliminating management layers to speed up decision-making. Creating a consistent organizational structure across all brands is one of Gap’s goals.

The majority of those targeted for layoffs are confirmed to be senior staff at the San Francisco and New York headquarters as well as at various stores. As of the end of January, Gap employed approximately 95,000 people. The company confirmed that most of these employees work at retail stores, with only 9% commuting to headquarters.

Additionally, the company stated that severance and related costs for the laid-off employees will amount to between $100 million and $120 million. Most of the layoff measures are expected to be completed by the end of July.

Meanwhile, on the same day, U.S. cloud service company Dropbox also announced a reduction of 500 employees, equivalent to 16% of its global workforce. The company cited growth slowdown and the need to restructure its business in response to the advent of the artificial intelligence (AI) computing era as reasons for the layoffs.

This content was produced with the assistance of AI translation services.