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Layoffs of 1,800 workers at Gap due to significant corporate reorganization

Reduction in workforce size forms part of an initiative to trim management hierarchy and lower costs.

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Thousands of employees at Gap face job losses as the company undergoes a substantial reorganization
Thousands of employees at Gap face job losses as the company undergoes a substantial reorganization

Layoffs of 1,800 workers at Gap due to significant corporate reorganization

In a bid to optimise its operating model and unlock untapped potential, Gap Inc. has initiated a restructuring plan [5]. This move, which has resulted in layoffs and a shift in strategic brand focus, is aimed at making the company more customer-focused, faster, and creative.

The restructuring effort, currently underway without a permanent CEO at the helm, includes the elimination of positions at the company's headquarters and management roles in other regions [5]. Gap Inc. is planning to lay off 1,800 employees as part of this overhaul.

The financial outlook for Gap Inc. shows modest growth expectations, with the Zacks Consensus Estimates forecasting a 0.5% EPS growth in fiscal 2025 and a more robust 6.3% EPS growth in fiscal 2026 [2]. This suggests the company is aiming for gradual financial recovery and improvement in profitability.

The layoffs stem from a broader restructuring initiative to optimise the company's operating model, likely necessitated by shifting consumer preferences and the need to revive some underperforming brands within its portfolio [5]. For instance, while Gap's flagship brands like Gap and Old Navy have shown strong momentum, the Athleta brand has struggled, with an 8% decline in comparable sales and a 6% drop in net sales in early 2025 [2].

Gap Inc. is placing a strong bet on reviving Athleta, which it considers a core growth driver despite its recent struggles [2]. The company is investing heavily in design talent and reassessing Athleta’s product mix to strike a balance between performance, style, and purpose. The brand's focus on inclusivity, sustainability, and empowerment provides a solid foundation, but it must translate these values into innovative products and effective marketing that resonates with consumers.

Meanwhile, the firm’s flagship brands continue to perform well, supporting the overall turnaround strategy [2]. Insider trading activity and equity grants reported in mid-2025 suggest that key executives and directors remain engaged and incentivized as part of Gap’s ongoing transformation efforts [1][3].

However, the restructuring plan is expected to cost about $100 million to $120 million in pre-tax expenses, including $75 million to $85 million in employee-related costs and $25 million to $35 million in costs like consulting fees [5]. The restructuring plan, confirmed in a filing with the Securities and Exchange Commission on Thursday, also includes the elimination of the chief growth officer role and turnover in leadership in human resources and at the Athleta brand.

The once iconic Gap brand has struggled for a while, and the ill-fated tie-up with Ye (Kanye West) ended last year [5]. Neil Saunders, GlobalData Managing Director, stated that Gap is not in a good place, financially or strategically [4]. Saunders also mentioned that the lack of a permanent CEO only exacerbates the issues at Gap Inc.

In March, interim CEO Bob Martin said that the company was close to finding someone for the permanent CEO position, but there has been no update since [4]. Despite the challenges, Martin remains optimistic, stating that the restructuring plan could yield annualized savings of $300 million [4].

Sources: [1] https://www.sec.gov/ [2] https://www.zacks.com/ [3] https://www.nasdaq.com/ [4] https://www.reuters.com/ [5] https://www.businessinsider.com/

  1. In the absence of a permanent CEO, Gap Inc. is currently restructuring its business, including eliminating positions at the company's headquarters and management roles in other regions, which has led to the planned layoff of 1,800 employees.
  2. The financial outlook for Gap Inc. shows moderate growth expectations, with an anticipated 0.5% EPS growth in fiscal 2025 and a more robust 6.3% EPS growth in fiscal 2026, suggesting a gradual financial recovery and improvement in profitability.
  3. The restructuring initiative aims to optimize the company's operating model, likely due to shifting consumer preferences and the need to revive underperforming brands within the portfolio, such as the struggling Athleta brand, which has shown an 8% decline in comparable sales in early 2025.
  4. Gap Inc. is investing heavily in design talent and reassessing Athleta's product mix to strike a balance between performance, style, and purpose, with the brand's focus on inclusivity, sustainability, and empowerment providing a solid foundation for turnaround.
  5. The restructuring plan,expected to cost between $100 million to $120 million in pre-tax expenses, also includes the elimination of the chief growth officer role and turnover in leadership at the Athleta brand, as well as consulting fees and employee-related costs.

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