Gap to furlough majority of North America retail staff, reduces global HQ count
Gap Inc. announced on Monday that it was extending its store closures, forcing the company to furlough the majority of its store teams in the United States and Canada, as well as head office employees globally.
Store employees will stop receiving pay, but will continue to get applicable benefits until stores are able to reopen.
Likewise, the company is reducing its headcount across its corporate functions around the world.
As a cost reduction measure, the entire Gap Inc. leadership team along with the board of directors will also take a temporary reduction in pay.
“After taking the extraordinary measures of temporarily closing all of our company-owned stores in North America and Europe two weeks ago, we are now in a position where we must take deeper actions. Each decision, however difficult, has been made to ensure that we build toward a future where Gap Inc. can come out of this stronger – for our customers, our shareholders and, most importantly, our teams,” said Sonia Syngal, president and CEO.
“We know that tens of thousands of people rely on us to support themselves and their families, and that millions more around the world rely on our business. We are doing everything we can to provide support during this time, and we are intensely focused on welcoming back our store teams and customers as soon as we are able.”
In the mean time, Gap has set up an 'Employee Resource Center', which includes resources to help employees find and apply for temporary roles at other retailers that remain open and hiring.
Last week, the apparel retailer withdrew its full-year forecast issued earlier this month, as it started to feel the financial impact of the Covid-19 crisis.
In order to strengthen financial flexibility, it also said that it would suspend its dividend and draw down on its entire $500 million credit facility.
“The company believes these actions along with the decisions announced today will support the company in navigating through the unprecedented level of uncertainty and disruption currently experienced by the retail sector,” Gap inc. said in a news statement.
The company is one of several retailers feeling the sales hit due to store closures and restrictions imposed to slow the spread of the virus in China and now in the United States, Canada and Europe.
The retailer said it would provide an update during its first-quarter conference call in May.
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