Gap Inc. Expands Franchise Partnership to Bring Gap and Banana Republic to Russia

SAN FRANCISCO--(BUSINESS WIRE)--Expanding its partnership with prominent franchising company Fiba Holding A.S., Gap Inc. (NYSE:GPS) today announced an agreement that will bring its Gap and Banana Republic brands to customers in Russia. With this announcement, the company has agreements to operate franchise stores in 17 countries.

"With 80 franchise stores around the world, we've learned a great deal about how well our Gap and Banana Republic brands resonate with customers in many diverse countries," said Ron Young, senior vice president of international strategic alliances for Gap Inc. "We're very selective in choosing our franchising partners. It made perfect sense to expand our work with a strong existing partner to take our brands to the vibrant shopping areas in Russia."

Fiba Holding A.S. currently operates franchise stores for the Gap and Banana Republic brands in Turkey, as previously announced. Fiba Holding A.S. has a proven track record in franchise operations in Russia and is the ninth largest bank in Russia.

Under this agreement, Fiba Holding A.S. plans to open Gap and Banana Republic stores over the next five years. The first Gap stores are expected to open for the 2008 holiday season and the first Banana Republic stores are expected to open for the 2009 holiday season.

Since the program began two years ago, more than 60 Gap franchise stores and more than 20 Banana Republic franchise stores have opened.

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," "project," and similar expressions also identify forward-looking statements. Forward-looking statements include, without limitation, statements regarding the timing of store openings pursuant to the announced franchise agreement.

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 our franchisee will be unable to successfully open, operate and grow the Gap and/or Banana Republic branded apparel and accessories stores planned for Russia; the risk that the company will be unsuccessful in gauging fashion trends and changing consumer preferences; the highly competitive nature of the company's business internationally and its dependence on consumer spending patterns, which are influenced by numerous other factors; the risk that the company will be unsuccessful in implementing its strategic, operating and people initiatives; the risk that adverse changes in the company's credit ratings may have a negative impact on its financing costs, structure and access to capital in future periods; the risk that changes to the company's IT systems may disrupt its operations; the risk that trade matters, events causing disruptions in product shipments from China and other foreign countries, or an inability to secure sufficient manufacturing capacity may disrupt the company's supply chain or operations; the risk that the company's efforts to expand internationally through franchising and similar arrangements may not be successful and could impair the value of its brands; 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 the company's reputation or operations; and 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, 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 February 2, 2008.

These forward-looking statements are based on information as of May 19, 2008. 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 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 Piperlime brand names. Fiscal 2007 sales were $15.8 billion. Gap Inc. operates more than 3,100 stores in the United States, the United Kingdom, Canada, France, Japan and Ireland. In addition, Gap Inc. is expanding its international presence with franchise agreements for Asia, the Middle East and Europe. For more information, please visit gapinc.com.

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