A pedestrian walks into the closed GAP flagship store in San Francisco, California on August 18, 2020.
Justin Sullivan | Getty Images
Gap said on Wednesday it would invest $ 140 million to build a distribution center in Longview, Texas, as part of its effort to double the online business over the next two years.
Upon completion, Gap said the 850,000-square-foot facility could process 1 million packages per day. Initially, it will be used for Old Navy’s emerging e-commerce business, and then expand to other parts of Gap.
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 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, forcing many retailers to reconsider their investments and pour more money into supply chains and logistics. E-commerce giant Amazon has announced several investments in its warehouses, including building new ones, as its retail business has grown over the past year. Big-box chains Walmart and Target have found ways to use their stores as mini-fulfillment centers, while Macy’s took two of its department stores late last year and converted them into pint-sized distribution centers.
While Gap’s sales have declined from 2019 levels during the health crisis, with fewer Americans visiting malls and buying clothing, the company has seen tremendous growth online. And it expects it to stay.
Gap said it plans to gain half of Internet sales by fiscal 2023 as it closes stores with less performance and invests more in its growing brands Old Navy and Athleta. The company is closing about 30% of its namesake Gap and Banana Republic stores in North America, leaving it with a larger presence online and away from shopping malls.
For the quarter ending October 31, Gap’s digital business grew by 61%, accounting 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 approximately year-on-year, with $ 3.99 billion.
Gap shares have risen about 44% over the past twelve months.
The retailer is expected to report earnings in the fourth quarter after the market closes on March 4th.