Gap Inc. is cutting 500 corporate roles, according to a Wall Street Journal report that was confirmed by the company.
The job cuts will mostly impact the retailer’s offices in San Fransisco and New York, as well as in Asia, and will represent a combination of layoffs and the elimination of certain open roles, the Journal reported.
The news comes on the heels of a rough quarter for the apparel company, which withdrew its guidance for the year in August after reporting a net loss of $49 million in the second quarter of 2022.
Gap cited inflationary pressures impacting the lower-income consumer and the wrong merchandise mix and sizes at its Old Navy banner as cause for its recent trouble. The beleaguered San Francisco-based company is also in the midst of an executive search after former CEO Sonia Syngal stepped down from her role in July.
And just last week, Kanye West’s Yeezy brand terminated its contract with Gap after accusing the retailer of failing to fulfill certain contractual obligations, such as creating Yeezy Gap-branded stores. According to the Journal, these cuts are unrelated to the termination of the Yeezy partnership.
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In 2021, West struck a 10-year deal for Yeezy Gap with Gap Inc. with the option to renew after five years. West launched his Yeezy x Gap line for the first time at brick-and-mortar Gap stores on July 21, along with product from the Yeezy Gap Engineered by Balenciaga collection. The collection became available in 45 stores the following day.
According to Neil Saunders, managing director of GlobalData, these job cuts might help the company financially in the short and medium term, but they are unlikely to help the company achieve a long-term turnaround.
“What Gap desperately needs is a coherent and clear plan that puts Old Navy back on track and reinvigorates the ailing Gap brand,” Saunders said in a statement. “Unfortunately, neither of these things is in place. With the lack of a permanent CEO, the partnership with Yeezy going south and various supply chain snafus, the Gap is holding a whole basket of problems and very few solutions.”
As the U.S. economy suffers, layoffs and hiring freezes are impacting other retail companies as well. Earlier this month, Rent the Runway announced it would lay off about a quarter of its staff, joining companies like Walmart, Allbirds, Shopify and more announcing similar cuts.
