A pedestrian passes the closed GAP store on August 18, 2020 in San Francisco, California.
Justin Sullivan | Getty Images
Gap said on Wednesday that 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 per day. It will initially be used for Old Navy’s burgeoning e-commerce business, and then it will be expanded 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.
Covid’s health crisis accelerated the shift to e-commerce and forced many retailers to rethink 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 a lot in the past year. The major Walmart and Target chains have found ways to use their stores as mini service centers, while Macy’s took two of its department stores late last year and converted them into small distribution centers.
While Gap sales fell from 2019 levels during the health crisis, with fewer Americans visiting malls and buying clothes, the company has seen unbridled growth online. And hopefully that will continue.
Gap said it plans to get half of its Internet sales by fiscal 2023, as it closes underperforming stores and invests more in the growing clothing brands Old Navy and Athleta. The company is closing about 30% of its namesake stores Gap and Banana Republic in North America, which will leave it with a greater presence online and away from malls.
In the quarter ended October 31, Gap’s digital business grew 61% and accounted for 40% of total sales. The company said it added more than 3.4 million customers online during the period. Overall, revenue was stable year on year during the quarter, at $ 3.99 billion.
Gap’s shares have risen about 44% in the past 12 months.
The retailer is expected to disclose fourth quarter earnings after the market closed on March 4.