Gap will eliminate nearly 500 corporate jobs, joining other struggling retailers as the industry sees a post-pandemic slump and battles high inflation, a Gap spokesperson confirmed to the Daily Caller News Foundation.
The layoffs will occur primarily at the retail giant’s corporate offices in New York, San Francisco and Asia, anonymous sources told The Wall Street Journal, who originally reported on the layoffs. Gap’s cuts follow a string of corporate layoffs across all sectors of the economy: in July, 7- Eleven cut 880 corporate employees and online retailer Shopify laid off around 1,000 employees, in August, Walmart let go 200 corporate employees and Ford announced plans to let go nearly 2000 white-collar workers, while Goldman Sachs is expected to fire around 500 employees this fall. (RELATED: ‘Whiplash’: Economists Warn The Labor Market Is The Next Victim Of Inflation)
Corporate layoffs in the retail sector have been attributed to slowing retail sales, as inflation pressures consumers to focus on necessities and less on nonessential items, leading to backlogs in unsold inventory at retailers across the country, the WSJ reported.
Following the Bureau of Labor Statistics’ July employment report, Heritage Foundation economist E.J. Antoni warned the Daily Caller News Foundation that high inflation would likely prompt significant layoffs, as companies are forced to combat reduced demand from consumers, and keep costs low.
Gap’s struggles are not all attributable to inflation, however, as the company has faced declining sales of Gap branded items for years, the WSJ reported. Most recently, an ill-fated effort to offer more inclusive clothing sizes at subsidiary Old Navy resulted in shortages of typically sized clothes, and excess inventory of extra-large and extra-small clothing, according to the WSJ.
Retailers are not the only ones facing earnings hits; shipping giant FedEx announced a nearly $800 million reduction in anticipated earnings on Friday, prompting a more than 20% drop in company stocks. Ford announced Monday that inflation was responsible for approximately $1 billion in lost profits in the third quarter, prompting a more than 11.5% drop in stock prices at time of writing.
“We’ve let our operating costs increase at a faster rate than our sales, and in turn our profitability,” said Gap’s executive chairman and interim CEO Bob Martin in an internal memo announcing the layoffs obtained by the WSJ. Gap stocks had fallen more than 3% on Tuesday at time of writing, but had fallen 60% at the same time last year.
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