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Gap Distribution-Centre Fire Seen as Holiday Headache for Chain

With the holidays just a few months away, that could disrupt Gap’s critical selling season, a fire at the retailer’s distribution centre in Fishkill, New York, may create a “meaningful bottleneck” for the company
Source: Gap
By
  • Bloomberg

NEW YORK, United States — Gap Inc.'s headaches keep coming.

A fire at the retailer's distribution centre in Fishkill, New York, may create a "meaningful bottleneck" for the company, according to Wells Fargo & Co. analyst Ike Boruchow. With the holidays just a few months away, that could disrupt Gap's critical selling season, he said.

No one was hurt in the blaze, which struck Monday, according to Debbie Felix, a spokeswoman for the company. An investigation is under way, she said. Until Gap can assess the extent of the damage, it is relying on its other distribution centres, like those in Ohio and Tennessee, to fulfill orders, she said.

“While it will take time to understand the full impact and cause of the fire, we have contingency plans in place and are working across our North American network of distributions centres to continue to serve our customers,” she said.

The blaze brings another setback to a company struggling to reignite growth at all three of its major chains. Same-store sales fell 3 percent at Gap last quarter and dropped 9 percent at Banana Republic. Old Navy was flat in the period.

“They are already struggling to grow sales and any delays in merchandise may further alienate and frustrate the customer,” said Poonam Goyal, an analyst at Bloomberg Intelligence.

The shares fell 4.3 percent to $25.34 on Tuesday. The decline cut the company’s year-to-date gain to 2.6 percent.

The Fishkill centre supplied the high-volume Northeast region and represented about 10 percent of total distribution space, according to Boruchow.

By Lindsey Rupp and Lily Katz; editors: Nick Turner and Mark Schoifet.

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