As a result of the unprecedented impacts of the COVID-19 virus, Gap Inc. has taken a number of actions to mitigate the financial impact of this crisis and position our business to survive and thrive as we emerge from it. One of the ways we’ve responded is by diligently managing inventory to align with demand, particularly as the business works through the temporary closure of our North American stores.
Our multi-prong efforts to control costs have included identifying products we can sell in the short-term, those we can store and sell later, planned orders that we will not place and – where necessary - those orders we need to cut. Throughout, we have been in close communications with our vendors and, over the past few weeks, we have been meeting with each of them individually to evaluate our orders, understand local operating abilities or restrictions in each sourcing country, discuss the health and wellness safeguards in place for factory workers, and establish plans for the months ahead. These ongoing conversations have taken time to ensure we are considering the multiple factors of each decision. We recognize the enormous pressures our vendors are under as a result of this crisis, and the demands that apparel brands and retailers are placing upon them during this time. We have not taken any of these steps without first seeking to understand and mitigate the impacts on their operations and their employees.
As we have made inventory decisions in partnership with our suppliers, we remain committed to communicating those changes with transparency, including the following impacts to Summer and Fall 2020 orders across all Gap Inc. brands:
- The number of cancelled purchase orders is lower than 3% of purchase orders by value for finished garments and garments in production. We are working with our vendors to explore liquidation opportunities for these finished garments.
- We are working with our vendors and suppliers to utilize un-cut raw materials for future seasons.
Given our long-term relationships with our suppliers – some of whom have been our partners for 10, 20 or even 30 years – our focus has been on working together to ensure that, on the other side of this pandemic, we build a sustainable recovery for all of us, including our suppliers and their workers.