US clothing retailer Gap could end up taking a sales loss of US $ 650 million owing to supply chain troubles.
Following a not-so impressive Q3, the American fashion retailer’s expectations for the year have gone for a six.
The retailer has said that the ongoing supply chain and inventory troubles could now cost Gap sales loss between US $ 550 million and US $ 650 million. And this comes after the retailer spent US $ 450 million on air freight to avoid shipping delays.
The apparel retail giant said that significant product delays in the third quarter due to factory closures and port congestion were instrumental in causing a companywide net sales slump of 1.3 per cent.
While for many retailers, the Q3 numbers have been impressive, it’s been different for Gap. Substantiating further, Sonia Syngal, CEO, Gap, said “Coming off record sales performance in Q2, we had accelerated momentum heading into the back half before facing disruption to our supply chain.”
She added that the disruption was driven by the 2.5 month closure of Gap’s top manufacturing country, Vietnam, as well as port congestion, both of which affected the retailer’s ability to fully meet strong customer demand.
Reportedly, about a third (32 per cent) of Gap Inc.’s purchases last year were from factories in Vietnam.
Gap was founded in 1969 and operates six primary divisions, namely, Gap (the namesake brand), Banana Republic, Old Navy, Intermix, Hill City and Athleta.
