Gap to invest $140 million in new warehouse as online sales surge

Gap plans to generate half of its sales from the internet by 2023 as more Americans shift their offline spending online.

Gap said Wednesday it will invest $140 million to build a distribution center in Longview, Texas, as part of its efforts to double its online business over the next two years.

When completed, Gap says the 850,000-square-foot facility will be able to handle 1 million packages a day, initially for Old Navy's burgeoning e-commerce business before expanding 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 positions over the next five years . It will also bring more than 1,000 part-time and seasonal jobs to the region by 2026.

Construction is set to begin in April. Gap expects it to be fully operational by August 2022.

The pandemic has accelerated the shift from physical sales to e-commerce and forced many retailers to rethink their investments and put more money into supply chain and logistics. E-commerce giant Amazon has announced several investments in its warehouses, including building new warehouses, as its retail business has grown rapidly over the past year.

Big-box chains Walmart and Target have found ways to use their stores as small fulfillment centers, while Macy’s acquired two department stores late last year and turned them into pint-sized distribution centers.

Gap's sales have fallen from 2019 levels during the health crisis, with fewer Americans visiting malls and window shopping, but the company's online business has surged , and the company hopes it can hold up.

Gap said it plans to generate half of its sales from the internet by fiscal 2023 as it closes underperforming stores and invests more in its growing Old Navy and Athleta apparel brands. The company is closing about 30% of its namesake Gap and Banana Republic stores in North America, which will give it a bigger presence online and outside malls.

Gap's digital business grew 61% in the quarter ended Oct. 31 and accounted for 40% of total sales. The company said it added more than 3.4 million customers online during the period. Overall, revenue for the quarter was flat year-over-year at $3.99 billion.

Gap's shares have risen about 44% over the past 12 months. The retailer is expected to report fourth-quarter earnings after the market closes on March 4.

Online Sales

Gap

North America

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