An estimated 500 corporate jobs are being cut at Gap, adding to the woes the giant retailer is currently facing.
The cuts include a mix of layoffs and job openings at the company’s corporate offices in New York, San Francisco and Asia, according to a person familiar with the situation. The Wall Street Journal, which first reported the news, said the layoffs began in recent days and affected roughly 5 percent of Gap’s 8,700 employees.
News of the layoffs comes months after Gap reported weak first-quarter earnings, with sales falling at its flagship brand and its most popular Old Navy chain. In July, the company announced that CEO Sonia Syngal would be stepping down after less than three years. He will be replaced by an interim CEO while the company searches for a permanent leader.
Neil Saunders, managing director of GlobalData, wrote in an analyst note that the job cuts “make sense” as the company’s sales slow and its retail footprint shrinks. He added that Old Navy has no longer been strong enough to boost Gap’s bottom line.
“Traditionally, Gap could rely on its Old Navy banner to cover any slowdowns in other parts of the business. However, with the division facing supply chain issues and softening demand in the family segment, the company as a whole is at serious risk and investors need to take tougher action to calm down and present better numbers in the second half of the year,” Saunders wrote.
Last week, Kanye West announced that he was ending his two-year partnership with Gap due to “non-compliance.” He saved that the retailer broke their partnership by not opening Yeezy brand stores and distributing his clothes as originally planned, among other things.
Gap ( GPS ) confirmed the partnership was winding down in an internal company email seen by CNN Business.
Shares of Gap fell nearly 3% in Tuesday’s trading, with shares down 50% for the year.