Start with a calendar and nothing else.
May 20, 2022. May 25, 2022. May 26, 2022. May 27, 2022. Four events, eight days, all connected to the same problem at Old Navy. Then, in or about August 2022, SVES placed ten purchase orders for 10,060,207 pieces of Old Navy merchandise.
SVES says the sequence is not chance. No court has adopted that reading, and none has rejected it either, because the question has never been put to a judge.
THE NEWSPAPER STORY
On May 20, 2022, the Wall Street Journal published an article reporting that BodEquality, Old Navy’s extended size initiative, had contributed to declining sales in its stores. That date is recorded in a federal appeals court opinion.
THE CONTRACT AMENDMENT
On or about May 25, 2022, Gap and SVES executed the Second Amendment to their reseller agreement. A San Francisco judge’s decision describes what it did: it required Gap to send SVES a spreadsheet of what Gap actually intended to ship after SVES placed an order, and it gave SVES 45 days from receipt to report any delivery discrepancy in one aggregated written report. According to SVES, the very next provision said no refunds and no returns.
One detail still needs nailing down. SVES’s public account says the Second Amendment took effect May 17, 2022. The court’s decision says on or about May 25. The week is the same either way, but the executed document should settle it.
THE EARNINGS CALL
On May 26, 2022, Gap held its first quarter earnings call. By SVES’s account of that call, the company told investors it had overestimated demand in stores and had over planned larger sizes.
THE SECURITIES FILING
On May 27, 2022, Gap filed a quarterly report with the Securities and Exchange Commission stating that the quarter’s results were hurt in part by execution missteps in size and assortment at Old Navy related to BodEquality. That sentence is quoted directly in the appeals court opinion.
Q: DOES THE TIMING PROVE ANYTHING?
A: No court has ruled on that question.
SVES’s position is that the contract terms that later defeated it, the 45 day clock and the bar on refunds and returns, went into place during the same week Gap went public about its plus size problem, and only months before the largest transaction the two companies ever did. That is SVES’s reading. The San Francisco judge made no finding about why the Second Amendment was signed when it was, because that question was never put to him.
WHAT IS NOT IN DISPUTE
What is beyond dispute is what Gap knew about its plus size inventory by that point, because the appeals court laid it out. BodEquality launched in August 2021, requiring stores to carry every item in the women’s lineup in every size and to cut back the sizes they already stocked to make room. Within weeks, some Old Navy stores had sold out of mediums but not the larger sizes and were moving plus size clothes to clearance. In January 2022, Gap pulled extended sizes from about 75 stores. By February or March, it had decided to sell extended sizes online only.
By the end of May 2022 the problem was on file with the SEC. Three months after that, 10,060,207 units began moving toward Florida.