US clothing retailer Gap is to cut 500 to 700 jobs at its US headquarters as its profits dropped 51 per cent to $115 million in its first quarter.
The decision reverses an earlier plan to add 3-4 per cent more staff to its 10,000 administrative staff this year. The job cuts will knock $10-$20 million off next quarter's pre-tax figures.
Gap's total sales increased by 12 per cent through the first five months of the year, but the gains reflected the addition of nearly 700 new stores over the past year.
The company operates 3,881 Gap, Banana Republic and Old Navy stores, a 22 per cent increase from the same time last year.
But as the group expanded its empire like-for-like sales have fallen 8 per cent over the first five months of the year and have declined in each of the last 13 months.
This year's lacklustre start comes on the heels of a 22 per cent decline in the Gap's profit last year when the company earned $877 million on sales of $13.7 billion.
PA