A pedestrian walks near the iconic GAP store closed on August 18, 2020 in San Francisco, California.
Justin Sullivan | Getty Images
Gap said Wednesday it will invest $ 140 million to build a distribution center in Longview, Texas, as part of its effort to double its online business over the next two years.
Upon completion, Gap said the 850,000-square-foot facility will be able to process 1 million packages a day. Initially, it will be used for the growing business of the Old Navy, then it will expand to other parts of the Gap business.
Gap expects the facility to create more than 500 full-time jobs by the end of 2023 and more than 1,000 in the next five years. It is also expected to bring more than 1,000 part-time and seasonal jobs to the area by 2026.
Construction will begin in April. Gap expects it to be fully operational by August 2022.
The Covid health crisis has accelerated the transition to e-commerce and forced many retailers to rethink their investments and sell more money in supply chains and logistics. E-commerce giant Amazon has announced several investments in its warehouses, including the construction of new ones, as its retail business has grown in the last year. Large box chains Walmart and Target have found ways to use their stores as mini fulfillment centers, while Macy’s took two of its stores late last year and turned them into large distribution centers.
While Gap’s sales fell from 2019 levels during the health crisis, with fewer Americans visiting malls and buying clothing, the company saw rampant growth online. And he expects this to stay around.
Gap said it plans to get half of its online sales by fiscal year 2023 as it closes low-performing stores and invests more in its Old Navy and Athleta clothing brands. The company is in the process of closing about 30% of its eponymous Gap and Banana Republic stores in North America, which will leave it with a greater online presence and away from malls.
For the quarter ended October 31, the Gap digital business grew by 61% and accounted for 40% of total sales. The company said it added more than 3.4 million customers online during that period. Overall, revenue was about a year over the year in that quarter, at $ 3.99 billion.
Gap shares have risen by about 44% in the last 12 months.
The retailer is expected to report gains in the fourth quarter after closing on March 4.