Gap Inc. Reports July Sales

Company Guides Q2 EPS Above Analyst Consensus

SAN FRANCISCO .– Gap Inc. (NYSE: GPS) today reported net sales of $924 million for the four-week period ended August 1, 2009, which represents a 7 percent decrease compared with net sales of $998 million for the four-week period ended August 2, 2008. The company’s comparable store sales for July 2009 were down 8 percent compared with an 11 percent decrease in July 2008.

“We delivered July merchandise margins significantly above last year,” said Sabrina Simmons, chief financial officer of Gap Inc. “We expect diluted earnings per share for the second quarter to be $0.30 to $0.32. We’re pleased with this range of earnings and our consistently healthy merchandise margins.”

Comparable store sales for July 2009 were as follows:
• Gap North America: negative 9 percent versus negative 6 percent last year
• Banana Republic North America: negative 7 percent versus negative 8 percent last year
• Old Navy North America: negative 8 percent versus negative 16 percent last year
• International: negative 4 percent versus negative 9 percent last year



Second Quarter Sales Results and Earnings Guidance

The company expects diluted earnings per share for the second quarter of fiscal year 2009 to be $0.30 to $0.32 on a GAAP basis, exceeding the current First Call estimate of $0.28.

For the thirteen weeks ended August 1, 2009, total company net sales were $3.24 billion, which is a decrease of 7 percent as compared with net sales of $3.50 billion for the thirteen weeks ended August 2, 2008. The company’s second quarter comparable store sales decreased 8 percent compared with a decrease of 10 percent in the second quarter of the prior year.

Comparable store sales for the second quarter of fiscal year 2009 were as follows:
• Gap North America: negative 10 percent versus negative 6 percent last year
• Banana Republic North America: negative 15 percent versus negative 6 percent last year
• Old Navy North America: negative 4 percent versus negative 16 percent last year
• International: negative 5 percent versus negative 6 percent last year

For more detailed information regarding the company’s July 2009 sales, please call 1-800-GAP-NEWS (1-800-427-6397) to listen to Gap Inc.’s monthly sales recording. International callers may call 706-634-4421.

Gap Inc. will release its second quarter earnings via press release on August 20, 2009, at 1:00 p.m. Pacific Time. In addition, the company will host a summary of Gap Inc.’s second quarter results in a live conference call and webcast at approximately 2:00 p.m. Pacific Time. The conference call can be accessed by calling 1-800-374-0168 and international callers may dial 706-634-0994. The webcast can be accessed at www.gapinc.com.

August Sales

The company will report August sales on September 3, 2009.