Over the weekend, apparel retailer Gap responded to reports from The Observer, a U.K. newspaper, that children as young as 10 were working in New Delhi factories churning out Gap clothes. GPS officials said Sunday that it will gather all of its Indian suppliers and forcefully reiterate its stance on child labor laws.
The Observer report quoted the children as saying they had been sold into the sweatshop environment by their families. Some worked up to 16 hours per day to hand-sew clothing but did not draw a salary as their supervisors claimed they were unpaid trainees. The newspaper also commented on claims of physical abuse.
Gap spokesman Bill Chandler told The Associated Press that the company acted swiftly in this situation, adding that under no circumstances is it acceptable for children to produce or work on garments ... we're willing to end relationship with vendors when they don't meet our standards. Last year, Gap stopped working with 23 factories due to violations.
While the story is disturbing and horrific, Gap's quick response seems to be keeping the shares afloat. In midday trading, the stock is marginally higher. For the past 2 years, however, GPS has been range-bound between the 16 and the 20 levels, with fairly few breaches to either side of this range. Currently, the equity is hovering near the midpoint of this area.