A pedestrian walks past GAP’s closed flagship store on August 18, 2020 in San Francisco, California.
Justin Sullivan | Getty Images
Gap said on Wednesday it will invest $ 140 million to build a distribution center in Longview, Texas, as part of its bid 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 per day. Initially, it will be used for Old Navy’s fast-growing e-commerce business and then expand to other parts of Gap’s 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 should also create more than 1,000 part-time and seasonal jobs in the area by 2026.
Construction will start in April. Gap expects it to be fully operational by August 2022.
Covid’s health crisis has accelerated the shift to e-commerce and has forced many retailers to rethink their investments and put more money into supply chains and logistics. Ecommerce giant Amazon has announced several investments in its warehouses, including the construction of new ones, as its retail business has boomed in the past year. Big box chains Walmart and Target have found ways to use their stores as mini-fulfillment centers, while Macy’s acquired two of its department stores late last year and converted them into pint-sized distribution centers.
While Gap’s sales figures have fallen from 2019 during the health crisis, with fewer Americans visiting malls and buying clothes, the company has seen rampant growth online. And it expects it to stick.
Gap has said it plans to hit half of its sales through the Internet by fiscal year 2023 as it closes underperforming stores and invests more in growing clothing brands Old Navy and Athleta. The company is in the process of closing about 30% of its eponymous Gap and Banana Republic stores in North America, which will give it a greater presence online and far from shopping centers.
For the quarter ended October 31, Gap’s digital business grew 61% and represented 40% of total revenue. The company said it added more than 3.4 million online customers during the period. Overall, sales for the quarter were about the same year over year at $ 3.99 billion.
Gap shares are up about 44% in the last 12 months.
The retailer is expected to report fourth quarter earnings after market close on March 4.