Gap Inc. anticipates further job cuts
In a significant move aimed at improving its performance, Gap Inc. has announced a strategic restructuring plan that includes workforce reductions and a flattened organisational structure. This initiative, which was first reported by The Wall Street Journal, comes amid ongoing struggles for the company, with fourth quarter sales declines at all of its brands.
The restructuring plan, which was implemented in 2022, is designed to optimise the company's operating model and streamline its operations to adapt to evolving market conditions. While precise figures on layoffs or cuts in individual departments are scarce, the company's restructuring suggests impacts across multiple areas.
Despite these staffing adjustments, Gap Inc. has maintained a commitment to diversity, equity, and inclusion, and continued to be recognised as one of the World's Best Employers in 2022.
The flattened structure will be achieved by increasing spans of control and decreasing management layers, with the aim of returning Gap Inc. to cultural relevance and creative focus. Notable departures include Mary Beth Laughton, the CEO of Athleta, and Sheila Peters, the Chief People Officer, who will leave at the end of the year. However, it is expected that these positions will be replaced.
The retailer's international sourcing division, San Francisco headquarters, and finance team will be affected by the reductions. The company has also eliminated the role of chief growth officer as part of this restructuring.
In March 2022, Gap Inc. executives announced expense cuts, including a shakeup in the C-suite, which would bring about $300 million in annualized savings. Bob Martin, the interim CEO and Chairman, stated that the company was close to naming a permanent CEO at that time. However, as of the current report, no permanent CEO has been announced.
The effort to reduce the workforce goes beyond cost-cutting. Gap Inc. has also announced a simplified leadership structure to optimise costs and organisational effectiveness. The company reported a net loss of $202 million in 2022, compared to a net income of $256 million in 2021.
The exact number of employees affected by the workforce reductions in Gap Inc.'s corporate offices has not been disclosed. The company is expanding its workforce reductions, which were initially announced in September 2022. The new structure is intended to improve the quality and speed of decision-making, starting with the leadership team.
As this restructuring plan unfolds, it remains to be seen how it will impact Gap Inc.'s performance in the long term. The company's commitment to diversity, equity, and inclusion, as well as its focus on cultural relevance and creative focus, suggest a desire to reposition itself for success in a changing retail landscape.
- The company's restructuring plan in 2022, affecting departments such as finance, international sourcing, and its San Francisco headquarters, is aimed at adapting to evolving market conditions and optimizing costs.
- As part of the restructuring, Gap Inc. has eliminated certain positions, including the role of chief growth officer, while also reducing its management layers and increasing spans of control, with the goal of improving decision-making speed and quality.
- The retailer, committed to diversity, equity, and inclusion, anticipates that these staffing adjustments, which also include workforce reductions in its corporate offices, will help reposition the company for success in the retail industry, leveraging AI and jobs in the finance sector to navigate the changing business landscape.
