Content area
Full Text
Gap Inc., while dealing with problems over store traffic, sluggish retail comps and the complications of splitting off Old Navy into a separate company, has taken steps to limit its exposure to Chinese sourcing in the midst of the U.S.-China trade war.
Art Peck, president and CEO of Gap Inc., told analysts on a conference call last week after the company released first quarter results that he was “not at all satisfied with,” that the topic impacting the entire industry, is the recently announced intent to impose on tariffs on clothing manufactured in China, which Peck agreed, “largely translates into a tax on American consumers.”
Sourcing
And Gap’s plan do dodge the impact of these potential tariffs, is in line with what many in the industry are likely to do.
“We’ve been migrating sourcing out of China for the last several years, and we’ll continue to do this responsibly going forward,” Peck said. “As recently as three years ago, about 25 percent of our product was manufactured in China. In our most recent disclosure, that number was down to 21 percent. And if you include only apparel, our penetration is approximately 16 percent, which is significantly lower than the relevant portions of the industry.”
Gap Inc.’s current guidance incorporates the impact of List 3 Chinese goods, but does not include the proposed List 4 changes, he noted. “We’re actively monitoring the issue, we’re actively engaged in the conversation, and we’re managing our sourcing operations accordingly,” Peck said.
Old Navy...