Photographer: Tomohiro Ohsumi/Bloomberg

Gap’s Distribution-Center Fire Could Bring Holiday Headaches

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Gap Inc.’s headaches keep coming.

A fire at the retailer’s distribution center 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’s relying on its other distribution centers, 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 centers 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 0.4 percent to $25.25 at 10:28 a.m Wednesday after falling 4.3 percent on Tuesday. The stock is now up less than 2 percent this year.

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

— With assistance by Lily Katz

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