SCD: Gap Inc lightens inventory load after a year of painful discounting

© Thavorn Chaisuwannakorn

SUPPLY CHAIN DIVE reports:

Dive Brief:

– Gap ended 2022 with inventory down 21% YoY to $2.4 billion, which executives said surpassed its goals to rein in stock levels.

– The company paid the price for clearing out product. Its merchandise margin fell by five percentage points YoY in fiscal 2022, with more than half of the increase from higher discounting.

– The reduction in inventory levels also benefited from a loosening supply chain, with less product stuck in transit compared to 2021, CFO Katrina O’Connell told analysts earlier this month. Going forward, executives expect sales and inventory to be more in balance.

Dive Insight:

Inventory pileups have plagued Gap, along with many of its peers in the apparel trade, since long before 2022 brought a sharp downtick in demand and surge in excess stocks.

Gap Inc.’s rush to shed inventory last year came as net sales fell 6% across the company, which owns the Old Navy, Banana Republic and Athleta brands in addition to its namesake banner. The reduction in stock represented a bright spot in an otherwise turbulent year — especially at Old Navy, which has struggled of late but historically is a source of strength for the company…

The full post can be read here.