Gap to invest $140 million to build Texas warehouse as online sales swell

A pedestrian walks by the closed GAP flagship retailer on August 18, 2020 in San Francisco, California.

Justin Sullivan | Getty Images

Gap mentioned Wednesday it would invest $140 million to assemble a distribution middle in Longview, Texas, as a part of its effort to double its online enterprise over the following two years.

Upon completion, Gap mentioned the 850,000-square-foot facility can be ready to course of 1 million packages per day. Initially, it will likely be used for Old Navy’s burgeoning e-commerce enterprise, then develop to different components of Gap’s enterprise.

Gap expects the power will create greater than 500 full-time jobs by the tip of 2023, and greater than 1,000 over the following 5 years. It additionally ought to carry greater than 1,000 part-time and seasonal jobs to the realm by 2026.

Construction will start in April. Gap expects it to be absolutely operational by August 2022.

The Covid well being disaster has accelerated the shift to e-commerce and has pressured many retailers to rethink their investments, and pour more cash into provide chains and logistics. The e-commerce big Amazon has introduced a number of investments in its warehouses, together with constructing new ones, as its retail enterprise has boomed over the previous 12 months. Big-box chains Walmart and Target have discovered methods to make the most of their shops as mini success facilities, whereas Macy’s took two of its shops late final 12 months and transformed them into pint-sized distribution facilities.

While Gap’s sales have slumped from 2019 ranges in the course of the well being disaster, with fewer Americans visiting malls and looking for attire, the corporate has seen rampant progress online. And it expects that to stick round.

Gap has said it plans to derive half of its sales from the internet by fiscal 2023 as it closes underperforming shops and invests extra in its rising Old Navy and Athleta attire manufacturers. The firm is within the strategy of shutting roughly 30% of its namesake Gap and Banana Republic shops in North America, which is able to go away it with a bigger presence online and away from malls.

For the quarter ended Oct. 31, Gap’s digital business grew 61% and accounted for 40% of total sales. The firm mentioned it added greater than 3.4 million prospects online in the course of the interval. Overall, income was about flat 12 months over 12 months in the course of the quarter, at $3.99 billion.

Gap shares are up about 44% over the previous 12 months.

The retailer is anticipated to report fourth-quarter earnings after market shut on March 4.

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