Aditi Sebastian

(Reuters] – Gap Inc (NYSE 🙂 lowered its profit and net sales forecasts for full year on Tuesday. The company estimated that the supply-chain crisis could result in lost sales of up to $650m and an increase in expenses during the holiday season.

Inventory shortages due to port congestion, surging shipping costs and labor crunches have been plaguing retailers, with companies such as Abercrombie & Fitch and Nike (NYSE:) Having to deal with empty shelves and delayed inventory.

Gap is currently dealing with closures at factories in Vietnam, which account for 30% of its production. The brand said that shortages reduced third quarter sales by $300 million. Brands were not able to satisfy strong demand due to eased restrictions, and the return to social gatherings.

Sonia Syngal the Chief Executive Officer, however, remains optimistic about air-carry plans due to strong demand for Old Navy clothes and Gap’s Yoyeezy hoodies.

Syngal stated that the supply chain is improving and that the bet he made to fly product was to continue the momentum he had in the company.

The inventory was down by 1% in the last quarter. In order to reduce product shortages, the company will now invest approximately $450,000,000 annually in air freight and expand its shipping ports network.

Old Navy expects to see net sales increase by 20% annually, in contrast with the 30% growth it had previously forecast. According to IBES data from Refinitiv, analysts expect 28.4% growth.

Gap’s annual profit estimates have been reduced to $1.25-$1.40 per share, which excludes some charges. They were previously $2.10 to 2.05. On average, analysts expect to make $2.20 per shares.