The US fashion giant Gap wants to cut around 500 jobs in the office in view of falling sales in order to reduce costs.
Those affected are primarily employees in the offices in San Francisco and New York as well as in Asia, as people familiar with the matter told the Wall Street Journal. In a memo to employees seen by the newspaper, Gap’s interim CEO Bob Martin said, “We’ve allowed our operating expenses to grow faster than our sales, and therefore our profitability.”
The news comes at an uneasy time for Gap, whose shares fell last week when Kanye West announced he was ending his partnership with the retailer early after eight years, with the rap star citing a breach of contract by Gap. The acclaimed partnership launched in 2021 and was expected to generate $1 billion in annual sales spanning men’s, women’s and children’s apparel and accessories. After the initial announcement of the partnership, Gap’s share price hit a forty-year high.
Weak sales
The news of the downsizing comes at a turbulent time for Gap’s business. In the second quarter ended July 30, the company generated revenue of $3.86 billion, down 8 percent from a year earlier.
Gap, which owns the eponymous brand as well as Old Navy, Banana Republic and Athleta, said the decline in sales was due to a variety of issues, including size and assortment imbalances and slowing demand from lower-income customers.
Gap has also seen a number of management changes recently. In July it was announced that CEO Sonia Syngal would be leaving the company. The search for a successor is still ongoing. At the same time, Horacio Barbeito was appointed CEO of ailing brand Old Navy after former boss Nancy Green resigned in April.
This translated and edited post previously appeared on FashionUnited.uk.