Gap to lay off about 1,800 employees in second round of job cuts
10:48 am Thursday, April 27th, 2023
(Reuters) -Gap Inc said on Thursday it would cut about 1,800 jobs in a second round of layoffs, joining a set of big U.S. companies that are downsizing in earnest as high inflation eats into consumer wallets.
Shares of the Banana Republic parent rose about 2% in early trade.
In September, Gap eliminated about 500 corporate workers across a range of departments as it struggled to protect margins and battled weak sales. As of Jan. 28, the apparel chain had about 95,000 employees, according to a regulatory filing.
Mass layoffs to rein in costs have swept across Corporate America over the past months – from tech giants such as Facebook-parent Meta Platforms Inc and Alphabet Inc to retailers such as Clorox Co.
Gap said it expects to take on about $100 million to $120 million in aggregate pre-tax costs – consisting of about $75 million to $85 million in employee-related expenses – as a result of the workforce reduction, which is expected to be completed by the end of the first half of fiscal 2023.
The Wall Street Journal first reported on the new round of job cuts earlier this week.
In March, Gap posted a bigger-than-expected fourth-quarter loss and forecast 2023 sales below estimates, hurt by slowing demand for its apparel and challenges around outdated inventory at its Old Navy brand.
Consumers, especially at the lower- to mid-income rung, have curbed spending on non-essential items, impacting sales of apparel with all of Gap’s four brands posting a fall in sales in the fourth quarter.
The company is in the middle of a CEO transition after Sonia Syngal stepped down last year, and is currently led on an interim basis by Executive Chairman Bob Martin.
(Reporting by Anne Florentyna Gnanaraja Sekar and Ananya Mariam Rajesh in Bengaluru; Editing by Savio D’Souza, Nivedita Bhattacharjee and Devika Syamnath)
