Two major San Francisco-based companies announced mass layoffs on Thursday, with Gap announcing that 1,800 corporate positions will be cut and Dropbox announcing that 16% of all employees, or around 500 people, will be let go.
Beginning in October of last year, the tech sector across the Bay Area announced mass layoffs in the tens of thousands. These have included Twitter, Peloton, Lyft, Opendoor, Chime, Stripe, Intel, Microsoft, and numerous others. In January, Salesforce cut 10% of its staff, or around 7,000 jobs, in only their latest round after several other cuts last year. Seattle-based Amazon slashed 18,000 jobs, with many coming in Silicon Valley city Sunnyvale. and Google cut 12,000 employees. Then in February, thousands more lost their jobs due to layoffs at former Silicon Valley stars PayPal, NetApp, Yahoo, and Twilio. Last month, another round of job cuts at Meta led to another 10,000 people losing their jobs, while earlier this month Salesforce announced that so many people had been let go that they would be leaving an entire office building. Even usually strong tech sector companies such as Apple, Lyft, and Amazon also made small cuts this month.
While Gap, one of the largest clothing retailers in the US covering brands such as Gap, Banana Republic, Old Navy and Athleta, isn’t in the tech sector, their layoffs have a major effect on the city, impacting office vacancies, the city’s tax base, and bringing in workers to spend money in the city’s downtown during the workweek.
A previous round of layoffs affecting 5% of all corporate employees, or around 500 workers, was enacted in September. However, a further 6% quarterly loss in sales combined with losses totaling $263 million compared to only $18 million in losses a year ago led to the huge cuts on Thursday.
According to a regulatory filing on Thursday, 1,800 corporate employees will be laid off between now and the end of July. These cuts will save the company $300 million annually and will streamline many higher level duties.
“We are taking the necessary actions to reshape Gap Inc. for the future – simplifying and optimizing our operating model, elevating creativity, and driving better delivery in every dimension of the customer experience,” explained CEO Bob Martin on Thursday.
An unnamed corporate employee at the company’s headquarters added in a Globe interview that “The layoffs were expected but still shocking. Everyone is stressed out over this. It’s a huge struggle for everyone in the industry right now, but it seems to have hit us harder than most.”
1,800 let go at Gap, 500 at Dropbox
Meanwhile, Dropbox announced in a statement on Thursday that they would be laying off 500 workers. According to CEO Drew Houston, the layoffs are due to both the rise of AI in the industry and a tightening economy affecting spending by customers.
“I’m writing to share that I’ve made the difficult decision to reduce our global workforce by about 16%, or 500 Dropboxers,” said Houston on Thursday. “First, while our business is profitable, our growth has been slowing. Part of this is due to the natural maturation of our existing businesses, but more recently, headwinds from the economic downturn have put pressure on our customers and, in turn, on our business. As a result, some investments that used to deliver positive returns are no longer sustainable.”
“Second, and more consequentially, the AI era of computing has finally arrived. We’ve believed for many years that AI will give us new superpowers and completely transform knowledge work. And we’ve been building towards this future for a long time, as this year’s product pipeline will demonstrate.”
“In an ideal world, we’d simply shift people from one team to another. And we’ve done that wherever possible. However, our next stage of growth requires a different mix of skill sets, particularly in AI and early-stage product development.”
“And we need to acknowledge some other hard truths. In some areas, investments that showed promise before the downturn have more limited potential today. In others, we haven’t been executing consistently or managing performance as tightly as we need to. So we’ve made more significant cuts in these areas in order to free up investment in our future growth.”
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