Gap Inc. Expands Global Presence Through New Franchise Agreement to Serve Customers in Israel

SAN FRANCISCO--(BUSINESS WIRE)--Expanding its worldwide network of franchise partners, Gap Inc. (NYSE:GPS) today announced an agreement with Elbit Trade & Retail Ltd. to bring Gap and Banana Republic stores to Israel. Under the franchise agreement with Elbit, the first Gap store in Israel will open this fall, featuring clothing for adults, kids and babies. Banana Republic, which will offer apparel for men and women, is expected to open in spring 2010.

“We selected Elbit Trade & Retail for their extensive experience in real estate development and their strong track record of operating franchise stores for other retailers.”

“By signing this agreement, we’re building upon the success we’ve seen in other countries in the Middle East and Mediterranean,” said Ron Young, senior vice president of international strategic alliances for Gap Inc. “We selected Elbit Trade & Retail for their extensive experience in real estate development and their strong track record of operating franchise stores for other retailers.”

Together with its franchise partners, Gap Inc. has opened 89 Gap and 32 Banana Republic franchise stores in 14 countries around the world.

Gap franchise stores are open in Bahrain, Greece, Indonesia, Korea, Kuwait, Oman, Qatar, Malaysia, Russia, Saudi Arabia, Philippines, Singapore, Turkey and the United Arab Emirates. Banana Republic franchise stores have opened in Bahrain, Indonesia, South Korea, Kuwait, Oman, Qatar, Malaysia, Singapore, Philippines, Turkey and the United Arab Emirates. In addition, Gap Inc. has signed and announced agreements to open Gap and Banana Republic franchise stores in Bulgaria, Croatia, Cyprus, Romania, Egypt and Jordan.

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 Israel; the risk that the company will be unsuccessful in gauging fashion trends and changing consumer preferences; the risk that changes in general economic conditions, consumer confidence, 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 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. Readers should also consult the company's quarterly report on Form 10-Q for the fiscal quarter ended November 1, 2008.

These forward-looking statements are based on information as of February 16, 2009. 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 2008 sales were $14.5 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 in Asia, Europe, Latin America and the Middle East. For more information, please visit gapinc.com.