Shares in Gap fell 21% on Wednesday on the news.
Photo: Justin Sullivan / .
Gap lost $ 300 million in sales it would have had this holiday season due to pandemic-related factory closures and the delays in the transport ports that caused the merchandise not to arrive at the stores on time.
“While we had planned for known supply chain constraints … the impact on our business persisted longer than anticipated as weeks turned into months,” Gap CEO Sonia Syngal said Tuesday, according to CNN.
Gap shares fell 21% on Wednesday on the news..
Syngal said factories in Vietnam that produce clothing and shoes for Gap were closed for several weeks during the summer due to a second wave of a coronavirus outbreak in that country. Up to 30% of Gap’s production takes place in Vietnam.
“The two-and-a-half-month closure of our main manufacturing country, Vietnam, as well as port congestion affected our ability to fully meet strong customer demand,” Syngal said.
Gap Inc., the corporate that operates Gap, Old Navy, Banana Republic and Athleta stores, said it now also expects to lose between $ 250 million and $ 350 million in sales in the fourth quarter due to supply chain disruptions.
Old Navy, which is one of its top-performing brands in terms of sales, was hit the hardest by Vietnam’s factory closures, particularly for its women’s products, Syngal said.
Gap has taken steps to mitigate Christmas product delays, including spending $ 350 million on air transportation of 35% of merchandise. Christmas this year. Also, when possible, it shipped some of the inventory to ports on the east coast to avoid congestion at ports on the west coast.
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