EXCLUSIVE Gap says Russia shipments stopped in March. But its clothes kept coming.

NEW YORK/LONDON/ISTANBUL, Oct 31 (Reuters) – In March, clothing retailer Gap Inc ( GPS.N ) joined several Western companies in announcing it was halting shipments to Russia to protest its invasion of Ukraine.

“As a values-driven company, one that has prided itself on doing the right thing for the past 53 years in business, at this time we have also suspended shipments to Russia, where we have a small franchise presence,” said the San Francisco-based company announced in a March 10 message to its employees.

But Russian customs records reviewed by Reuters show that between March 11 and July 16, Gap franchisees in Moscow received 1,585 clothing shipments with a declared value of $5.2 million. More than three-quarters of the shipments list the supplier as Gap Europe Ltd, a London-based unit of Gap Inc.

The Russian customs records are sourced from several commercial trade data providers and run through September 30. They provide information on Russian imports from customs forms, including suppliers, importers, product descriptions and declared values.

The Gap consignments ranged from “knit children’s socks” and “children’s pyjamas” to “women’s textile blouses” and “men’s textile shorts”.

Clothing, apart from luxury items, generally does not fall under the recent Western sanctions against Russia so as not to punish ordinary citizens. But the deliveries after March 10 seem to contradict Gap’s claims to its employees.

A spokesperson for Gap Inc in San Francisco told Reuters in an Oct. 19 email that “we stopped shipments to Russia that we announced in March and have not resumed.”

Reuters later provided Gap with Russian customs data showing the 1,585 shipments after March 10 to Gap Retail LLC, a Gap franchisee in Moscow. It is operated by Fiba Perakende Grubu, an Istanbul-based retailer that operates all Gap stores in Russia, Turkey and Ukraine.

On October 28, Gap admitted to Reuters that it had continued to facilitate shipments of clothing to Russia until April — a month after it told employees it had suspended all shipments.

“Because orders are placed many months in advance, our franchise partner picked up its last order from our distribution center in April. Gap has neither shipped nor sold any merchandise to our Russian franchise partner since their final order was processed,” the Gap spokesman said in response to questions from Reuters.

Gap did not respond to questions about when exactly the orders were placed, when they were fulfilled or why it did not cancel outstanding orders after the March 10 announcement.

Asked why the garment shipments to Russia continued until July, a Fiba Perakende executive said in a statement, “These shipments were delayed due to longer transit times via Turkey, as well as additional handling time at Russian customs.”

But according to Russian customs records reviewed by Reuters, the vast majority of clothing shipments do not mention Turkey as a transit point. Fiba did not respond to a question about the discrepancy.

“SOME OBJECTS MISSING”

Fiba Perakende’s statement added that “due to Gap Inc’s decision to indefinitely suspend the supply of Gap products to Russia, Fiba is in the process of winding down its Gap franchise business in Russia, following the depletion of any remaining stock in Russia. “

Together with its e-commerce site, gap.ru, Fiba Perakende said in its statement that it had operated 23 stores in three major Russian cities.

Gap Europe disclosed $9.6 million in annual franchise sales for Russia in its latest fiscal year, which ended Jan. 30, 2021, down from $11.5 million the previous year, according to its annual report and financial statements. Gap Europe’s business has struggled and it closed dozens of its company-run stores last year in the UK and Ireland. A Gap Europe director did not respond to a request for comment on the Russian shipments.

A woman who answered the phone this week at a Gap store in central Moscow said it was open. When asked about its clothing selection, she replied: “Yes, we have a certain selection. It depends on what you’re looking for, of course. Some items are missing.”

Russian customs records show more than 1,200 shipments of Gap clothing to Russia between March 11 — the day after Gap Inc. announced it was halting shipments — and June 21. In any case, the supplier was listed as Gap Europe with the Netherlands as the departure country and Russia as the destination – without Turkey being mentioned as a transit point. In its latest annual report, Gap Europe said it is switching the distribution center for its franchise operations from the UK to the Netherlands.

Other shipments to Russia in June and July list the supplier as either “Ankara Customs” or another Istanbul company linked to Fiba Perakende – suggesting the clothes may have passed through Turkey.

After July 16, customs records show no deliveries to Gap Retail in Moscow, indicating that the flow of clothing to Russia had been stopped.

Gap’s statement in March that it had suspended shipments to Russia also said it would donate $1 million worth of clothing to Ukrainian refugees. In its latest statement to Reuters, Gap said: “We stand in solidarity with the people of Ukraine.”

Reporting by Siddharth Cavale in New York, Steve Stecklow in London and David Gauthier-Villars in Istanbul; Editing by Vanessa O’Connell and Chris Sanders

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