Gap Inc. announced plans Thursday to eliminate as many as 700 administrative jobs worldwide in an attempt to offset slowing sales.
The San Francisco-based retailer said after the close of U.S. markets that it would trim its headquarters staff of 10,000 employees by as much as 7%, mostly in the Bay Area, through layoffs and attrition.
The company had originally planned to expand administrative staff by up to 4%.
Gap also said it will scale back aggressive growth plans for the next two years by a third, with a new target of increasing square footage by 10% in 2002 and 2003. Millard Drexler, the company's president and chief executive, previously had stood by plans for 15% square-footage growth for the company's Gap, Old Navy and Banana Republic stores, even in the face of falling sales at existing stores.
The company expects to announce the total number of layoffs by August and complete the reductions by fall, a company spokesman said. As part of the reductions, Gap will record a pretax charge of $10 million to $20 million in its fiscal second quarter.
The employee cuts don't include associates at the company's chain stores, said spokesman Alan Marks. In the year that ended Feb. 3, the company had about 166,000 workers, including store clerks. He declined to provide the number of corporate employees.
Like many retailers, Gap has been hurt by the lethargic economy. Last month, Gap's sales at stores open for at least a year fell 10%.
Despite the slowdown, Gap said it still wants to boost its profit by 15% annually. The company earned $877 million last year on sales of $13.7 billion.
Shares of Gap rose 91 cents to close at $33.54 on the New York Stock Exchange. The stock has risen 32% this year.