Gap Inc. is slimming down to move quicker.
The retailer said it would lay off about 1,800 of its headquarters and upper field workforce — a significant cut for the company, which counts about 8,500 employees in its corporate offices out of a total workforce of 95,000.
Gap telegraphed that cuts were coming in March, when it reported that annual sales dropped 6 percent to $15.6 billion, leading to net losses of $202 million.
Bob Martin, executive chairman and interim chief executive officer, said in a statement: “We are taking the necessary actions to reshape Gap Inc. for the future — simplifying and optimizing our operating model, elevating creativity, and driving better delivery in every dimension of the customer experience.”
The layoffs, which were quantified in a regulatory filing, are expected to be completed in the first half and cost $100 million to $120 million while saving $300 million annually.
“These changes include the consistent brand leadership structures we announced last month aimed at flattening the organizational structure to improve the quality and speed of decision-making, while in turn reducing overhead expense,” Martin said.
Shareholders approved of the move toward more efficiency and pushed shares of Gap up 1.9 percent to $9.52 in midday trading on Wall Street — which leaves the retail giant with a market capitalization of just $3.5 billion.
Martin has been steering Gap since July, when former CEO Sonia Syngal was ousted. And while he said Gap was “close to naming a new CEO” last month, clearly there is still tough work to do in the meantime.
The interim CEO said the restructuring “means saying goodbye to friends and team members we care about, and I represent the collective voice of the company in expressing a sincere appreciation to every employee for the dedication, energy and heart they have given to Gap Inc.”
Retailers started laying off workers earlier this year as they both girded themselves for continued inflation and tougher economic times and reset after focusing on growth and trying to get every sales dollar while the consumer was still spending.
In addition to its namesake chain, Gap owns Banana Republic, Old Navy and Athleta.