Gap will conduct major restructuring at its European business next week as part of a cost-cutting drive by its US parent.
The retailer will make a number of positions redundant at its London headquarters and is expected to make an announcement to staff about the European team restructure on June 5. It is unclear whether store staff will be affected by the review. Gap employs between 6,500 and 7,500 people in its international division.
The cost-cutting follows sliding sales across the business. Results reported last week showed that comparable international sales fell 3 per cent in the first quarter to May 5 and like-for-like sales at Gap North America fell 4 per cent. Group net earnings fell 26 per cent to US$178 million for the period.
It is unclear whether the European design team, which European president Stephen Sunnucks has billed as Gap Europe's route to recovery, will be affected by the restructure.
However, a source close to Gap said that the board was still committed to pursuing its strategy of 'localisation', which includes the European-specific design, buying and marketing team. Its first full European-specific collection will hit stores this autumn.
The spokeswoman added that the retailer was also reviewing whether to recruit for vacant positions.