The layoff announcements continue this week with San Francisco-based Gap Inc., which managed to have a stellar year amid high consumer spending in 2021, followed by a serious slump so far this year.
Gap Inc. is reportedly eliminating some 500 jobs at its corporate headquarters in San Francisco, New York, and Asia, as the Wall Street Journal reports. That includes layoffs as well as the eliminations of currently open positions across multiple departments.
Gap's interim CEO Bob Martin wrote in a memo to employees Tuesday, "We’ve let our operating costs increase at a faster rate than our sales, and in turn our profitability."
The announcement comes not long after CEO Sonia Syngal resigned in July, and just a week after the company announced it was winding down a partnership with Kanye West's Yeezy label, with West's legal team alleging breach of contract on the part of Gap. Remaining Yeezy clothing items in the pipeline will still be released, the company said.
Shares in Gap are down 60% for the year amid declining sales. Per the Journal, the company saw a profit of $258 million in the second quarter of 2021, but the same quarter this year saw a $49 million loss, and overall sales are down 8% as consumer spending declines across the board.
The Gap retail brand has been on the wane for many years, evidenced by the closing of retail stores and the increasing attention on the Old Navy brand, which now accounts for about half of the company's revenue. The Journal notes that one significant failure for Old Navy in the past year had been the introduction of more inclusive sizing for its clothing, which have has left the company with excess inventory that has not sold.
In a sign of changing times, Gap closed its prominent flagship store at Powell and Market in San Francisco in 2020 along with two other retail locations in the city. But earlier this year, the company announced four new retail locations on the Embarcadero at its Rincon Hill headquarters — with storefronts for each of its brands, Gap, Old Navy, Athleta, and Banana Republic.
Gap had a previous round of corporate layoffs in 2015 that came with a slew of store closures, and in 2017, the company announced it would replace 200 under-performing Gap stores with Old Navy and Athleta locations.
The company has closed well over 800 stores in the last decade and a half, though the exact total is not clear.
Gap Inc. had around 8,700 corporate employees as of its last annual report in January, so the current layoffs will affect around 6% of its corporate workforce. The company employs a total of 97,000 people, primarily in retail locations.
Photo: Ian Deng