- Gap announced Thursday that it's cutting back on managers to reduce costs.
- At the same time, it announced a $273 million net loss for its most recent quarter.
It's not just the tech industry that's doing away with middle managers. Gap announced Thursday that it is cutting back on these workers to reduce costs and become more nimble.
The clothing retailer, which also owns Banana Republic and Old Navy, has struggled for several years as shoppers switch to trendier or cheaper brands. On Thursday, it reported a net loss of $273 million for the last three months of 2022 after group sales fell 6%.
Gap, which is without a permanent CEO, estimated that it will save $300 million by "increasing spans of control and decreasing management layers." As part of these changes, the company said it will eliminate the role of chief growth officer.
Gap also announced that the CEO of its athleticwear brand Athleta will leave immediately, while its chief people officer will step down at the end of the year. Both will be replaced, however.
Gap's decision to streamline its management structure echoes a trend in the wider corporate world, where companies are laying off workers regarded as an unnecessary expense.
Mark Zuckerberg said in February that Meta was "removing some layers of middle management to make decisions faster," with employees given the chance to convert to non-management roles or quit.
Elon Musk's dramatic slashing of Twitter's workforce also primarily targeted managers, while Salesforce CEO Marc Benioff told Insider that tech bosses are asking: "Do they need to unleash their own Elon within them?"
Last September, Gap laid off around 500 corporate employees. That came a week after it cut ties with Ye, the rapper-designer formerly known as Kanye West, whose antisemitic rant put an end to several Yeezy partnerships.
Neil Saunders of GlobalData Retail told clients this week: "Gap is rather like a lazy student that has the capability but completely lacks the capacity or will to put in the work to deliver a better performance."
With revenue falling across its brands, he added that Old Navy, previously considered its saving grace, is also "in serious danger of becoming as bland and boring as Gap."
Gap did not immediately respond to a request for comment from Insider, made outside normal working hours.