Gap Inc. Expands International Reach With Franchise Agreements For Middle East

Signs with Al Tayer Group for Up to 35 Gap and Banana Republic Stores by 2010

SAN FRANCISCO - April 18, 2006 - Gap Inc. (NYSE: GPS) announced a franchise agreement with leading retailer, Al Tayer Group, to introduce Gap and Banana Republic brands into five key markets in the Middle East. Al Tayer Group plans to open about 25 Gap and about 10 Banana Republic stores by 2010. The first Gap stores will open in the later part of 2006 and the first Banana Republic stores are scheduled to open in 2007.

“The Middle East, with its young and affluent population, is a particularly attractive market for the Gap and Banana Republic brands. Dubai, in particular, is a world class shopping destination with some of the largest and most important shopping malls in the world,” said Joshua Schulman, senior vice president of Gap Inc.’s International Strategic Alliances and Gap Japan Merchandising. “Through our alliance with Al Tayer Group and their deep understanding of these areas, we are now able to bring Gap’s casual style and Banana Republic’s affordable luxury to consumers in these dynamic markets.”

This is Gap Inc.’s second franchise agreement to extend its portfolio of brands to international markets. It follows the company’s January announcement that Gap and Banana Republic stores will open under franchise and distribution agreements in Singapore and Malaysia.

Under its agreement with a Gap Inc. subsidiary, Al Tayer Group and its local subsidiaries will hold exclusive rights to operate Gap and Banana Republic branded apparel and accessories stores in the United Arab Emirates, Kuwait, Qatar, Bahrain, and exclusive rights for Gap in Oman.

Gap Inc. will leverage Al Tayer Group’s expertise in building retail outlets in the Middle East and will provide access to Gap and Banana Republic’s world-renowned clothing and accessories. Al Tayer will purchase merchandise from Gap Inc. or suppliers designated by Gap Inc. and must adhere to Gap Inc.’s quality standards to preserve the reputation of the Gap and Banana Republic brands.

“We are looking forward to bringing Gap and Banana Republic brands to the Middle East markets. Being the largest luxury retailer in the region, we are pleased to be entering a new segment of the market with these globally successful brands. Providing a shopping experience synonymous with that of the brand’s home country, we’re confident about customers enjoying a truly international shopping experience,” said Khalid Al Tayer, group general manager of Business Development at Al Tayer Group.

Gap Inc. currently owns and operates Gap brand stores in five countries and Banana Republic stores in three countries. With today’s announcement and it’s previously announced franchise and distribution agreements for Singapore and Malaysia, the company is expanding the global reach of its brands with Gap stores in 12 countries and Banana Republic stores in 9 countries by 2010.

Forward-Looking Statements
This press release contains forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than those that are purely historical are forward-looking statements. Words such as “expect,” “anticipate,” “believe,” “estimate,” “intend,” “plan,” and similar expressions also identify forward-looking statements. Forward-looking statements include, without limitation, statements regarding the company’s intention to expand the Gap and Banana Republic brands via international franchising, Al Tayer Group’s intention to grow the Gap and Banana Republic brands in Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates; and the timing and number of stores that are expected to open.

Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those in the forward-looking statements. These factors include, without limitation, the following: the risk that Al Tayer Group will be unable to successfully open, operate and grow the number of Gap and/or Banana Republic branded apparel and accessories stores in Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates, the risk that the company will be unsuccessful in gauging fashion trends and changing consumer preferences; the highly competitive nature of the apparel and accessories markets internationally and the dependence of these markets on consumer spending patterns, which are influenced by numerous other factors; and the risk that trade matters, events causing disruptions in product shipments from China and other foreign countries, or IT systems changes may disrupt the company’s supply chain or operations; any of which could impact net sales, costs and expenses, and/or planned strategies. Additional information regarding factors that could cause results to differ can be found in the company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2006.

Future economic and industry trends that could potentially impact net sales and profitability are difficult to predict. These forward-looking statements are based on information as of April 18, 2006, and the company assumes no obligation to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.

About Al Tayer Group
Established in 1979, Al Tayer Group is among the GCC’s leading diverse business groups. Adding new dimensions to the country’s landscape with foresight and innovation, Al Tayer Group represents some of the world’s most renowned brands in the Automobile, Fashion, Jewellery, Perfume & Cosmetics and Publishing as well as Business & Service industries. Headquartered in Dubai, UAE, the Group comprises 20 companies and over 3,500 employees.

The Group’s Fashion and Jewelry division represents some of the most exclusive brands like Asprey & Garrard, Bvlgari, Boucheron, Bottega Veneta, Dolce & Gabanna, Giorgio Armani, Gucci, Sergio Rossi and Yves Saint Laurent. With the opening of the largest Harvey Nichols store outside of the UK, Al Tayer Group further consolidates its position as the largest luxury retailer in the region.

Through the Automotive division the Group represents a wide portfolio of brands in the UAE which include Ferrari, Maserati, Ford, Lincoln, Mercury, Land Rover and Jaguar. The Perfumes & Cosmetics division is active in the distribution as well as retail sector, operating the second largest perfumes and cosmetics chain in the UAE.

The Al Tayer Group’s representation in other fields includes ABB, Danzas and National Car Rental. The publishing business brings out a variety of titles, including Gulf News, the UAE’s largest circulating English daily.

Today, the Al Tayer Group’s operations cover the GCC and Middle East markets.

Further information on Al Tayer Group can be found at www.altayer.com

About Gap Inc.
Gap Inc. is a leading international specialty retailer offering clothing, accessories and personal care products for men, women, children and babies under the Gap, Banana Republic, Old Navy and Forth & Towne brand names. Fiscal 2005 sales were $16.0 billion. Gap Inc. operates about 3,000 stores in the United States, the United Kingdom, Canada, France and Japan. For more information, please visit gapinc.com.

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