The company aims to improve business efficiency and return to profitability.
U.S. clothing manufacturer and retailer Gap decided to lay off more than 500 employees as part of a strategy to cut operating costs. The company aims to improve business efficiency and return to profitability.
"Our goal is to align the organization, increase the span of control to create more robust roles and expand individual capabilities, and reduce the number of levels to eliminate bottlenecks and make better and faster decisions," commented Bob Martin, chairman and interim CEO of Gap.
On the latest news of the impending cuts, Gap stock is down 6%. Since the beginning of the year, the quotes of one of the largest fashion brands have fallen more than 16%.
Earlier it was reported that Gap will reduce the number of management levels to "improve the quality and speed of decision-making. The company is expected to save about $300 million yearly from the reorganization, including $150 million in 2023.
Athleta CEO Mary Beth Laughton has already left the company. Sheila Peters, chief human resources officer, will soon leave the Gap. In addition, the position of director of development previously held by Ashish Saxena will be eliminated.
The company said that each brand within Gap will have "a consistent leadership structure focused on achieving excellence for customers by enhancing brand design and creativity, focusing on end-to-end merchandising and providing better control of the customer experience across all markets and channels."
Last year, Gap, Old Navy, Banana Republic and Athleta struggled with declining operating performance. The group posted a net loss of $273 million for the first fiscal quarter of 2023. The retailer ended 2021 with a profit and posted net losses in 2020 and 2022.