Gap, Inc., the parent company of active lifestyle banner Athleta, has apparently become far too bloated in its corporate structure for its interim CEO and will undergo at least 500 corporate layoffs to tune the organization to the realities of the current marketplace.
The Wall Street Journal first reported the layoffs, and multiple publications reported updates to the initial story.
GPS shares were down more than 6 percent for the day to close at $9.43 on Tuesday.
“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,” Bob Martin, Gap’s chairman and interim CEO, told employees in a memo last week, according to reporting from CNBC.
One source said that the current round of job cuts would be larger than in September when Gap eliminated roughly 500 corporate positions. Those cuts were mainly at its main offices in San Francisco and New York and were part of an effort by the retailer to save about $250 million annually.
Martin shared with investors during a March earnings call to discuss fourth-quarter earnings that the retailer’s staff had been “dampened by a complicated organizational structure, bureaucracy and outdated processes.” On the same call, Martin said that Athleta Chief Mary Beth Laughton had left the company due to continued product missteps and not the deteriorating health of its women’s activewear brand.
Gap’s banners include Gap, Old Navy, Athleta, and Banana Republic.
Photo courtesy Gap
