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New Gap Layoffs Cut Corporate Bloat

Gap Inc. is cutting hundreds more jobs, adding to the 500 roles eliminated mostly in San Francisco and New York last September.

A spokesman for the Old Navy and Banana Republic parent declined to comment on the global corporate layoffs.

One source familiar with the latest job cuts said the headcount reductions will reshape the company from the “ground up.”

In March Gap Inc. chairman and interim CEO Bob Martin hinted at the upheaval ahead when the company reported fourth quarter and full-year earnings results.

“We are flattening the organization by increasing spans of control and decreasing management layers to improve the quality and speed of decision-making, starting with our leadership team,” Martin said. “Each of our brands now [has] consistent leadership structures focused on delivering excellence for our customers by elevating design and brand creative, focusing on merchandising end to end, and providing better oversight to the customer experience across all markets and channels.”

Among the senior-level executives who left the company in March were chief growth officer Asheesh Saksena and Athleta president and CEO Mary Beth Laughton. Gap’s chief people officer Sheila Peters is set to leave at the end of the year.

Job cuts should save $300 million a year, according to Martin, while the September layoffs were expected to put $250 million back on the balance sheet.

Martin took over when former president and chief executive Sonia Syngal left, and the board is “getting close to choosing the next CEO,” he said last month. The company is working to “provide our new leader with a quicker ramp in driving consistent, profitable growth over the long term,” he added.

The Wall Street Journal was first to report on the latest round of layoffs on Tuesday. Employees were notified of planned departures at the company’s international sourcing division on April 18. Prospective layoffs at San Francisco headquarters are slated for this week, followed by the finance team in late May, the report said, citing Martin’s memo to employees last week.

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For the fourth quarter ended Jan. 28, Gap’s net loss widened to $273 million on a 6 percent decline in net sales to $4.24 billion. The year-ago net loss was $16 million on net sales of $4.53 billion. Comparable sales fell 5 percent in the quarter, with store sales declining 3 percent and online sales—representing 41 percent of total net sales—slumping 10 percent. All divisions posted declines in net sales. By division, Gap was down 9 percent to $1.1 billion, Old Navy slipped 6 percent to $2.2 billion, Banana Republic declined 6 percent to $578 million and Athleta fell 1 percent to $436 million.

For the full year, the company posted a net loss of $202 million, against a profit of $265 million a year ago, on net sales that were down 6 percent to $15.62 billion.

Gap last September also parted ways with Kanye West when he pulled plug on Yeezy Gap.

When retailers need to cut costs, shedding workers and closing stores are often the first move. Gap is no exception as the company has been downsizing for several quarters, although that’s been primarily through a streamlining focused on Gap and Banana Republic store closures. The company is also believed to be considering selling or leasing its 162,000-square-foot 1 Harrison St. building in San Francisco., Kohl’s, EBay, Neiman Marcus and Walmart have all cut jobs recently. David’s Bridal and Bed Bath & Beyond‘s bankruptcies this month will also eliminate thousands of retail jobs.