Gap is cutting 500 corporate jobs as it searches for a CEO and answers
Gap Inc. is cutting 500 corporate jobs as it continues to search for a permanent CEO and it seeks to come up with answers to buoy its top and bottom lines following a second quarter that saw it report a 10 percent decline in comp sales and a net loss of $49 million.
The apparel retailer is eliminating jobs that are currently open and laying off staff primarily in its offices in New York and San Francisco, according to The Wall Street Journal, which first reported the news.
The Journal reviewed an internal memo sent yesterday to employees from Bob Martin, Gap’s executive chairman and interim CEO. Mr. Martin, who has decades of retail experience including serving as CEO of Walmart’s international business, stepped into the interim CEO role in July following Sonia Syngal’s departure from the company.
“We’ve let our operating costs increase at a faster rate than our sales, and in turn our profitability,” he wrote.
The problems facing the Gap banner have been ongoing for years forcing the chain to close stores and shift its real estate strategy from operating in malls to seeking standalone locations.
The chain’s Old Navy business, which for years had been relied on for consistent growth, has seen its business go in the wrong direction with much of its troubles attributed to fashion miscues and lost share to discounters and off-pricers. Old Navy has also taken hits from COVID-19-related factory closures and more recently the slow down in discretionary spending by Americans trying to navigate through a period of high inflation.
Last week Gap announced that it was winding down its business venture with Kanye West under the Yeezy Gap brand label. Mr. West accused the retailer of failing to live up to the terms of the agreement including releasing new apparel and opening retail stores, according to a separate Journal report. Items currently in the pipeline will continue with new merchandise priced below $100 expected in Gap stores.
A CNBC article in July posited that Gap needed to accomplish three things to get its business on track. These included finding a new CEO, putting Old Navy’s business back on track and prove out its relationship with Mr. West with solid business results. So far, the retail apparel chain operator has gone zero for three.
The company last week pulled its financial guidance for the year, CNBC reports in another article, citing macroeconomic conditions and executional challenges.
- Gap Inc. Reports Second Quarter Fiscal 2022 Results – Gap Inc.
- Gap Is Cutting 500 Corporate Jobs – The Wall Street Journal
- Where does Gap go next as CEO Sonia Syngal departs? – RetailWire
- Gap eliminating about 500 corporate jobs as sales fall – CNBC
- 3 things Gap needs to fix to turn its struggling business around – CNBC
- Are Old Navy’s issues more about demand than supply? – RetailWire
- Gap and Kanye West Are Ending Their Partnership – The Wall Street Journal
DISCUSSION QUESTIONS: What do you see as Gap Inc.’s current strengths and weaknesses? What does it need to build on the first and eliminate the second?