adv-06 adv-06

Gap has reduced its manufacturing exposure to China from 25 to 21%


gapGap has been moving sourcing out of China for the last several years and will continue to do this responsibly going forward. Less than five per cent of its sales come from China. Gap has reduced its manufacturing exposure to China from 25 to 21 per cent over the past three years. The trade war threatens to increase costs for consumers and temper growth in its third largest market, mainland China. The supply chain agreements emanating from China are a sore spot. Specifically for China, the company is working diligently to mitigate the potential problem for consumers by incrementally moving away from reliance on the region. Including only apparel, its penetration is approximately 16 per cent, which is significantly lower than the relevant portions of the industry. That level is lower than that of peers like Abercrombie & Fitch, one quarter of whose goods are manufactured in China. Gap, based in San Francisco, has been battered by a big miss on earnings and serious declines in same store sales across its key brands. Inventories in the first quarter were up over ten per cent as sales slowed and the potential for tariffs to temper consumer demand could worsen.