GAP will lay off nearly 500 workers from corporate sectors as part of its restructuring plan and in the midst of the need to cut expenses in the face of evidence of a business that is having problems.
The data, published this Wednesday, September 21 by The Wall Street Journalsays that the works that are completed are especially in the offices that the brand has in San Francisco and New York, in the United States, and in other countries, mainly in Asia.
The dismissals correspond to employees who performed tasks of a wide variety, the majority administrative of corporate buildings. According to what the US media publishes, some of the employees have already been notified of the layoffs in recent days, others have not yet.
“We have allowed our operating costs to increase at a faster rate than our sales and that has hit our profitability.” The text, according to WSJ, was written by Bob Martin, executive chairman and interim CEO of GAP, in a memo sent to all employees on Tuesday, September 20, with which he informed them about the job cuts.
GAP in trouble: sales and earnings crisis
GAP has been suffering years of falling sales of the flagship brand, the same one that gives the company its name, but also of others under its umbrella, such as Old Navy, which accounts for more than half of total revenue.
Indeed, the sales of Old Navy, which had been sustaining the business until before the pandemic, began a downward path that was accentuated when it developed the failed marketing strategy of making inclusive clothing sizes.
The company has been looking for a permanent CEO for two months after the departure of Sonia Syngal in July.
To make matters worse, last week, as we anticipated in Merca2.0, GAP said that ending a partnership with Kanye West to manufacture clothing under the Yeezy GAP brand, after West accused the company of breaching the contract they signed in 2021.
According to the WSJ, the job cuts are not related to West’s departure.
As of January this year, GAP had about 8,750 employees at global corporate headquarters and a total of 97,000 workers, if those working in stores are included.
a new stage
GAP is not the only retailer laying off workers, orOther American retailers, such as Walmart, Abercrombie & Fitch, and Stitch Fix, as well as Bed Bath & Beyond, have followed this same path. in the midst of a sharp drop in sales in a scenario of inflation and threat of recession.
Retail sales have slowed since the 2021 boom as customers spend less money on apparel and home goods.
High-income consumers divert that cash toward travel and dining. The low income, to food and pay energy bills.
That has caused retailers’ stock to pile up, which is driving down profits as they sell at deep discounts.
GAP, which also owns Banana Republic and Athleta, recorded a loss of 49 million dollars between May and Julydown from earnings of nearly $260 million in the same quarter of 2021.
Net sales, meanwhile, fell 8 percent. So far this year, GAP shares have plunged 60%.
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