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Gap Inc. is getting rid of jobs, and it will affect not only its office in the United States but worldwide.
As per The Wall Street Journal, sources who are familiar with the situation said that the clothing retailer had joined other major US-based companies in resorting to downsizing their workforce to reduce costs amid concerns of a recession in the country.
Moreover, the insiders said that the job cuts are part of Gap’s broad restructuring program that is being carried out to make the company more flexible and less bureaucratic. Although the terminations affect the company’s global workforce, most of them are from the corporate offices in New York and San Francisco. Gap Inc. expects to save more than $250 million per year after trimming its workforce.
The corporate job terminations were first revealed in September, and the company is laying off another 1,8000 workers in the latest round of layoffs. This batch is apparently larger than the previous one for the company’s staff in its offices.
The parent company of Old Navy and Banana Republic said it already started sending out layoff notifications to affected employees last week. For the job cuts in its San Francisco HQ, Gap will inform those who have to leave this week, while members of the finance team who will be laid off will receive notifications at the end of May.
“Our goal is to flatten the organization, increase spans of control to create more robust roles and individual empowerment, and decrease layers to remove bottlenecks and make better, faster decisions,” Gap’s chairman and interim chief executive, Bob Martin, told employees last week via a memo.
It was reported that earlier this week, Gap’s shares plunged by about 6%, and the stock has tumbled more than 16% this year. In any case, the layoffs come after the interim CEO told investors in March’s earnings call that the company’s workers were “dampened by a complicated organizational structure, bureaucracy, and outdated processes.”
“We are taking the necessary actions to reshape Gap Inc. for the future — simplifying and optimizing our operating model, elevating creativity, and driving better delivery in every dimension of the customer experience,” CNBC quoted Gap’s interim CEO as saying in the statement. “These changes include the consistent brand leadership structures we announced last month aimed at flattening the organizational structure to improve the quality and speed of decision-making, while in turn reducing overhead expense."
Photo by: Coolcaesar/Wikimedia Commons (CC BY-SA 3.0)
