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Gap Inc. Combines International Operations into One Division to Accelerate Global Growth


Stephen Sunnucks named President, International, Gap Inc.; Old Navy to expand outside North America

LONDON - As part of Gap Inc.’s global growth strategy, the company today announced that it will combine its International operations into one division, run out of London.

Led by Stephen Sunnucks, the International division will capitalize on Gap Inc.’s significant global business opportunities by bringing together its company-operated and franchise stores across Europe, the Middle East, North Africa, Asia Pacific and South America.

Since joining the company five years ago, Sunnucks, a 30-year retail veteran, successfully guided the growth of Gap and Banana Republic in Europe as well as oversaw the company’s rapidly-expanding franchise operations. With today’s announcement, his responsibilities have been expanded to lead the company’s brands outside North America. Currently, this amounts to about 530 stores across 30 countries, including eight of the world’s top 10 apparel retail markets.

“Our successful openings in China and Italy have given us further evidence that we have a strong game plan for entering and expanding into International markets through a unique combination of online, specialty retail, outlet and franchise stores,” said Glenn Murphy, chairman and CEO of Gap Inc. “Bringing our four International business units under the leadership of a proven global retail executive like Stephen Sunnucks allows us to leverage resources, operate consistently, and grow the business at an accelerated rate.”

Sunnucks added, “As we’ve expanded into new countries and introduced additional brands from our portfolio, our distinctively American aesthetic has resonated very well, everywhere from Milan to Shanghai to Sydney. We have the flexibility to adapt our formats for each market so that we can gain a larger share of the $1.4 trillion global apparel retail market.”

In addition to bringing together its International operations, the company also announced that John Ermatinger, currently president of Gap Inc.’s Asia Pacific Region, will take on a new role establishing Old Navy International. Ermatinger begins the new role in June, with the objective of opening Old Navy in Japan by the end of 2012. Gap Inc. started shipping products to over 90 countries in 2010, and Old Navy is the top performing Gap Inc. brand in 50 of those 90 countries, demonstrating the appeal of the brand outside North America.

“The Old Navy brand is well known globally for offering customers value, fashion, and a fun shopping experience for the entire family. We now have the International infrastructure in place to launch Old Navy in a cost effective manner in new markets through our range of channels,” added Murphy.

Today’s announcement builds on the company’s recent formation of a Gap Global Creative Center in New York, aimed at improving performance and executing one global design vision for Gap brand around the world.

Building on Gap Inc.’s International Momentum in 2010:

Gap Inc. has stated that it expects to increase its share of revenue that comes from International and online sales to at least 30 percent by 2013. In 2006, Gap Inc. operated in eight countries and only sold products online in the United States. Through its global expansion work in 2010, Gap Inc. products are now sold in 32 countries and available online to customers in over 90 countries worldwide.

Towards the end of 2010, the company opened its first Gap and Banana Republic flagship stores in Italy, and its first Gap stores and an online retail site in China. The new stores in Milan and China have been among the company’s top 10 percent performing stores in the world since their openings. In the year ahead, the company plans to open about 190 stores worldwide, including about 10 stores each in China and Italy. It plans to double the number of franchise stores to 400 by 2015.

Forward-Looking Statements

Old Navy’s expansion internationally, including in Japan by the end of 2012;
Global growth opportunities, including franchise, online and outlet growth;
Leveraging resources, operating consistently, and growing the business at an accelerated rate;
Gaining a larger share of the global apparel retail market;
International and online revenue mix by 2013; and
Number of new stores worldwide, including stores in China and Italy, and franchised stores.

Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause the company’s actual results to differ materially from those in the forward-looking statements. These factors include, without limitation, the following:

The risk that changes in general economic conditions or consumer spending patterns will have a negative impact on the company’s strategies;
The highly competitive nature of the company’s business internationally;
The risk that the company will be unsuccessful in gauging fashion trends and changing consumer preferences;
The risk that the company’s efforts to expand internationally may not be successful and could impair the value of its brands;
The risk that the impacts of the March 2011 earthquake, tsunami and nuclear crisis in Japan, including damage to stores and infrastructure, and reduced consumer spending, will have adverse effects on the company’s business and strategies;
The risk that the company’s franchisees will be unable to successfully open, operate, and grow the company’s franchised stores;
The risk that the company will be unsuccessful in identifying, negotiating, and securing new store locations effectively;
The risk that the company will be unsuccessful in implementing its strategic, operating and people initiatives;
The risk that changes in the company’s credit profile or deterioration in market conditions may limit its access to the capital markets;
The risk that updates or changes to the company’s information technology (“IT”) systems may disrupt its operations;
The risk that acts or omissions by the company’s third-party vendors, including a failure to comply with the company’s code of vendor conduct, could have a negative impact on its reputation or operations;
The risk that the company will not be successful in defending various proceedings, lawsuits, disputes, claims, and audits, any of which could impact net sales, expenses, and/or planned strategies; and
The risk that changes in the regulatory or administrative landscape could adversely affect the company’s financial condition and results of operations.

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 29, 2011.

These forward-looking statements are based on information as of April 19, 2011. 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.


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