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Gap Losing Sales Due to Snags in Supply Chain

Apparel company cites factory closures, warns of additional losses




Supply chain woes caused Gap Inc. to lose $300 million in sales in the run-up to the holiday season, according to CEO Sonia Syngal, who expounded on the issues in the company’s third quarter earnings call.

The loss, she said, was due to longer transit times and lost weeks of production that led to on-hand inventory shortages in the quarter. Syngal also cited a backlog at U.S. ports that “deteriorated meaningfully” from the first half of the year, resulting in up to three continuous weeks of unanticipated delays of fall product deliveries.

Additionally, factories in Vietnam – where 30 percent of the company’s product is made – were closed for more than two months this summer amid a coronavirus outbreak.

“While we had planned into the known supply chain constraints … the shock to our business persisted longer than anticipated as weeks turned into months,” she said.

The company said it expects to lose between $250 million and $350 million in sales in the fourth quarter.

Other takeaways from Gap’s 3Q earnings report:

  • Comparable sales increased 5 percent and net sales were down 1 percent compared to 2019 pre-COVID levels.
  • Online sales for the quarter increased 48 percent compared to 2019.
  • The company now expects full-year revenue growth to be about 20 percent versus fiscal year 2020.

Read the full earnings report.

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