US fashion giant Gap plans to cut around 500 office jobs as it looks to cut costs amid falling sales.
The move will mostly impact employees at the retailer's offices in San Francisco and New York, as well as in Asia, people familiar with the matter told The Wall Street Journal.
In a memo to employees, seen by the news publication, Gap’s executive chairman and interim chief executive Bob Martin said: “We’ve let our operating costs increase at a faster rate than our sales, and in turn our profitability.”
The news comes at a bumpy time for Gap, whose shares dropped last week when Kanye West revealed he was cutting his partnership with the retailer eight years early, with the rap star citing a breach of contract by Gap.
The much-hyped partnership was first launched in 2021 and was expected to generate 1 billion dollars in annual sales, spanning men’s, women’s, and children’s clothing and accessories. After the link-up was first announced, Gap’s share price hit a forty-year high.
The news of the staff cuts comes amid a turbulent period for Gap’s trading. In the second quarter ended July 30, the business made sales of 3.86 billion dollars, a drop of 8 percent year-over-year, or a 10 percent drop in comparable sales.
Gap, which alongside its namesake brand also owns Old Navy, Banana Republic, and Athleta, said the drop in sales was linked to various issues, including size and assortment imbalances, as well as slowing demand among lower-income shoppers.
The company swung to a net loss of 49 million dollars in the quarter from a profit of 258 million dollars a year earlier.
Gap has also undergone a number of key management changes recently. In July, it was revealed that president and chief executive officer Sonia Syngal would be exiting the business. A search for her successor is still underway.
In the same announcement, Gap named Horacio Barbeito as the new president and CEO of struggling brand Old Navy, after former chief Nancy Green stepped down in April.