Struggling apparel retailer Gap is cutting 1,800 jobs as it looks to reduce expenses.
The company announced the layoffs in a regulatory filing Thursday (April 27), in which it said these cuts were part of a plan to “simplify and optimize its operating model and structure,” including “decreasing management layers to improve quality.”
In a statement provided to PYMNTS, Gap interim CEO Bob Martin said the company was looking to “flatten” its organization to improve decision making and reduce overhead.
“As we move forward, we believe these efforts will release untapped potential across our brands, allowing us to show up as a more customer focused, faster, and creative company,” Martin said.
“As we shared in our last earnings press release, these actions are estimated to result in annualized savings of $300 million.”
That earnings report showed Gap’s sales for the year declining from $16.67 billion to $15.62 billion, while the company incurred a net loss of $202 million for the year, in sharp contrast to the net income of $256 million it reported in the previous fiscal year.
And in the quarter before that, Gap incurred $53 million in impairment charges when rapper Ye (formerly Kanye West) ended his contract with the company due to alleged contract violations and lack of creative control. The company pulled all Yeezy products from its stores in late October following the rapper’s anti-Semitic remarks.
The partnership — revealed in a wave of fanfare in 2020 — was expected to last up to a decade, with the potential to bring in $1 billion per year in sales for Gap.
As noted here earlier recently, the company chose to refrain from providing an outlook for the year ahead, citing unpredictable macroeconomic conditions and its efforts to undertake changes and recruit a new CEO.
With these challenges in mind, the company — whose brands include Old Navy and Banana Republic — has been looking for ways to get back its momentum and reconnect with shoppers.
To that end, PYMNTS wrote last week, “Gap has turned to the nostalgia trend, forging a partnership with Mattel,” teaming with the toymaker for an apparel collaboration based on brands such as Barbie, whose likeness will kick off the campaign.
The announcement said that the Gap x Barbie collection “embodies the ideals of inclusivity and individuality, which strongly align with the values of Gen Z,” PYMNTS wrote. It also coincides with the release of the “Barbie” movie, featuring Margot Robbie and Ryan Gosling.
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