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Gap could take $650M sales hit from supply chain woes

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For all the talk of a supply chain crisis, many retailers have posted solid numbers for Q3. While inventory has been down for many if not most, they’ve still eked out decent if not excellent sales numbers and strong margins.The company planned for supply chain disruption, as much of the industry has after a turbulent year, but that “the shock to our business persisted longer than anticipated as weeks turned into months.”

The impact on brands and retailers is often specific, depending on the factories, regions and countries where their products were made. In the case of Gap, COVID-19 outbreaks in Vietnam had a severe impact on the company. According to its 10-K, about a third (32%) of Gap Inc.’s purchases last year were from factories in Vietnam. Delays at ports and in oceangoing vessels compounded the troubles for Gap Inc. To sidestep them, it paid $100 million to ship products by air and expects to pay nearly half a billion dollars for the year.

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