Gap to Cut 1,800 Jobs Across Brands, Including Old Navy and Banana Republic, as Part of Streamlining Efforts: Interim CEO Bob Martin.
April 27, 2023
American clothing retailer Gap is set to cut 1,800 jobs across its brands, including its namesake line, Old Navy, Banana Republic, and Athleta. The company's interim CEO, Bob Martin, announced the decision last Thursday as part of an effort to streamline operations and cut costs. The job cuts will affect roles at Gap's headquarters locations and upper field positions, including regional store leaders who hold leadership titles outside of the headquarter office.
According to Martin, the layoffs are expected to result in annualized savings of $300 million. Gap expects to see half of those savings in 2023, and the company expects to complete the layoffs by the end of July, according to a securities filing. However, the layoffs will cost Gap about $100 million to $120 million in aggregate pre-tax costs. The company is expected to spend $75 million to $85 million in employee-related costs and $25 million to $35 million on consulting and other associated costs.
Gap's stocks rose more than 2% on Thursday morning after the announcement of the layoffs. However, the retailer's stock has fallen about 16% this year, with shares hovering above $9, giving the company a market cap of about $3.5 billion.
In a statement, Martin said that the layoffs are part of the company's efforts to reshape Gap for the future by simplifying and optimizing its operating model, elevating creativity, and driving better delivery in every dimension of the customer experience. These changes include the consistent brand leadership structures aimed at flattening the organizational structure to improve the quality and speed of decision-making while reducing overhead expenses.
During an earnings call in March, Martin said that the company planned to decrease management layers but did not disclose at the time how many positions would be cut. The new operating and leadership structure the company laid out last month aims to decrease layers to remove bottlenecks and make better, faster decisions.
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