Gap Inc. Announces Franchise Agreement to Bring Gap Brand to Australia

SAN FRANCISCO --(BUSINESS WIRE)-- Continuing with its international expansion, Gap Inc. (NYSE:GPS) today announced a franchise agreement to bring Gap brand to a new continent, Australia. The franchise business is a key part of Gap Inc.'s global business strategy. With today's announcement, Gap Inc. has franchise agreements in place for a total of 24 countries on four continents.

"The country has a strong retail sector and an underserved market of consumers who appreciate the casual, American style that Gap represents. We're confident that we have the right partner to help us bring Gap to consumers in Australia, given their success bringing other international brands to the Australian marketplace." .Gap Inc. has signed a franchise agreement with Brand Republic Pty Ltd, a subsidiary of Busby Holdings Australia Pty Ltd, for exclusive rights to operate Gap brand stores in Australia.

"With Australia, we're extending our international presence to a whole new continent," said Stefan Laban, vice president of Strategic Alliances for Gap Inc. "The country has a strong retail sector and an underserved market of consumers who appreciate the casual, American style that Gap represents. We're confident that we have the right partner to help us bring Gap to consumers in Australia, given their success bringing other international brands to the Australian marketplace."

Under the terms of the agreement, Brand Republic will purchase merchandise from Gap and must adhere to the company's quality standards.

The first Gap store is expected to open in the popular Chadstone Mall in Melbourne, Australia in the fall of 2010. More than 130 franchise stores are currently open in 20 countries, spanning Asia, Europe, Latin America and the Middle East.

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; (i) international growth and (ii) 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 branded apparel and accessories stores planned for Australia; the risk that the company will be unsuccessful in gauging fashion trends and changing consumer preferences; the risk that changes in general economic conditions, or consumer spending patterns will have a negative impact on the company's financial performance or strategies; 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 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 January 31, 2009. Readers should also consult the company's quarterly report on Form 10-Q for the fiscal quarter ended October 31, 2009.

These forward-looking statements are based on information as of March 24, 2010. 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 global specialty retailer offering clothing, accessories and personal care products for men, women, children and babies under the Gap, Banana Republic, Old Navy, Piperlime and Athleta brand names. Fiscal 2009 sales were $14.2 billion. Gap Inc. operates about 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 in Asia, Australia, Europe, Latin America and the Middle East.

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