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.
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.
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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.
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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.