Get All Access for $5/mo

Gap Was Compared to a 'Lazy Student' After Its $273 Million Loss — Now the Retailer's Trying to Do Better by Copying Meta The retailer thinks the move will save it $300 million.

By Amanda Breen Edited by Jessica Thomas

Bloomberg | Getty Images

Tech companies like Meta and Twitter have made headlines for slashing their workforces, targeting management roles in particular, and companies in other industries are taking the hint.

Gap announced on Thursday that it's "decreasing management layers" to improve decision-making amid slumping sales, Insider reported.

Gap estimates the cut will result in $300 million in annualized savings.

Related: Kanye West Says He Wants to Ditch Gap, Adidas

The retailer, which owns Banana Republic, Old Navy and Athleta, has experienced declining popularity for years, and it reported a net loss of $273 million for the last three months of 2022 after group sales fell 6%.

Additionally, as of August 2022, Gap had "bloated" merchandise levels with a 37% increase in inventory year over year, The Wall Street Journal reported. Although some items might be "timeless" basics that Gap brings back in the future, the retailer will also have to compete with other apparel sellers' excess inventory, which could hinder profitability.

"Gap is rather like a lazy student that has the capability but completely lacks the capacity or will to put in the work to deliver a better performance," Neil Saunders of GlobalData Retail told clients this week.

Related: Small Changes That Can Yield Big Retail Sales Increases

Gap is still searching for its next CEO, and Athleta's CEO, who just announced her departure, will also have to be replaced.

Gap Inc. is down nearly 24% year over year.

Amanda Breen

Entrepreneur Staff

Senior Features Writer

Amanda Breen is a senior features writer at Entrepreneur.com. She is a graduate of Barnard College and received an MFA in writing at Columbia University, where she was a news fellow for the School of the Arts.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Business Solutions

Right Now, You Can Get More Than 310 Hours of IT Training for Just $50

Stay ahead in tech with the CompTIA Super Bundle.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Business News

These Companies Offer the Best Work-Life Balance, According to Employees

The ranking is based on Glassdoor ratings and reviews.

Leadership

Why Your AI Strategy Will Fail Without the Right Talent in Place

Using fractional AI experts through specialized platforms allows companies to access top talent cost-effectively, drive innovation and scale agile strategies for growth.