Shares of Gap are down after news that the retailer is cutting 500 corporate jobs.
DAVE BRIGGS: My play is Gap. Shares slumping on news of the clothing retailer laying off 500 corporate employees to cut expenses. The layoffs are mainly at Gap's corporate headquarters in San Francisco, but you'll also see some in New York and in Asia. Said Gap's executive chairman and their interim CEO, as they're searching for a new one, Bob Martin in this internal memo, "We've let our operating costs increase at a faster rate than our sales and, in turn, our profitability."
Sales have been slumping for years at the Gap, as well as Old Navy. They recently ended this partnership with Kanye West and the Yeezy Gap label after Kanye accused Gap of breaching their agreement. Gap posted a $49 million loss in the most recent quarter. Net sales fell 8%.
Gap shares today fell another 3%, and they have been cut in half this year. They've had a load of problems, including the latest inventory issues, Rachelle. And it doesn't look like brighter days are right around the corner.
RACHELLE AKUFFO: And they did say that partnership with Kanye had nothing to do with the layoffs, that it was a completely separate incident. But the timing-- the timing really couldn't be worse. If you're already in the spotlight with these accusations, and then, on top of that, adding layoffs-- and we know, obviously, it's not just happening with retail.
We've seen these layoffs happening with tech as well. But it's sort of the bad timing when the consumer is already sort of figuring out what they want. You really want to stand out, and Gap is standing out but not in the best of ways, Seana.
SEANA SMITH: Yeah, it's been a very tough time for Gap, just looking back at what we've seen play out over the last year or two with the company, struggling, really, to turn around its business. Now in the face of very high inflation. Consumers pulling back spending heading in to the holiday season.
We have heard from a number of retailers warn just about what that consumer spending could potentially look like at their stores over the coming months. So Gap coming out, making this announcements for the layoffs, I don't think it's a huge surprise to anyone who's been following this company very closely and, really, what we're seeing play out in the retail sector at large. But again, coming in the same week or so that we got the Kanye news, a very tough couple of days here for Gap.