Gap Inc. Outlines Comprehensive China Market Entry Plans, Starting With Four Gap Brand Stores and Online Shopping Site in Late 2010

Gap Inc. (NYSE:GPS) today unveiled details of its entry into China – the cornerstone of the company’s global expansion strategy – with plans to open Gap stores in Beijing and Shanghai in late 2010, and simultaneously bring an online shopping experience to all Chinese consumers. The first four Gap stores will feature a full range of Gap adult, GapKids and babyGap product, including all styles of the brand’s stylish and fashionable 1969 Premium Jeans.

This announcement marks the start of a long-term, multi-channel consumer market entry strategy for Gap Inc. that involves more stores in major regions, including Hong Kong, in the coming year.

As vibrant urban centers in China, Shanghai and Beijing have been chosen as the ideal locations for the first Gap stores, which will be wholly owned and operated.

In Shanghai, a 1,796 square meter Gap flagship will be located on the premier Nanjing West Road, occupying two floors in the Venture Tech building. It will be followed by another 1,140 square meter flagship located on Mid Huaihai Road, one of Shanghai’s top high streets.

In Beijing, a 1,165 square meter flagship store will span two floors in the APM building on Wanfujing Street; another 1,800 square meter store will be opened in Chaobei Joy City, a large scale regional shopping center.

As part of its multi-channel entry strategy, Gap Inc. has partnered with Shanghai Yi Shang Network Information Co., Ltd., an e-commerce company with a legacy of delivering online retail experience in China. The online shopping site will give consumers throughout the country the opportunity to shop for Gap products whenever and wherever they want.

To lead these expansion efforts, the company has appointed Redmond Yeung as President, China for Gap Inc., and Lorenzo Moretti, as Managing Director, China for Gap Inc. Both Yeung and Moretti are accomplished executives who together bring hands-on experience building global brands including Best Buy, Tesco and Marks & Spencer. Yeung will lead business development and real estate strategy, and Moretti will focus on all store operations, product-to-market activities and infrastructure development. Based in Shanghai, where Gap Inc. will also open its corporate China headquarters, they will report to John Ermatinger, President, Asia Pacific Region for Gap Inc., who will oversee the businesses for both Japan and China.

"For over 15 years, we've been increasing our connection to global consumers by offering Gap's American inspired casual style to now over 25 countries,” said Glenn Murphy, Chairman and CEO, Gap Inc. "Now, after spending a lot of time listening to Chinese consumers and learning more about their shopping preferences, we’re excited at the prospect of meeting their fashion needs -- initially by bringing our Gap designs to our stores and online later this year.”

Murphy continued: "We’ve appreciated all the guidance we’ve received from Chinese government entities as well as business partners, and we’re confident that the combination of a seasoned team of executives as well as our initial investment of four Gap stores in world famous urban centers will help us to successfully integrate our brands over time into China’s dynamic retail market.”

Since opening its first Gap store in San Francisco in 1969, Gap Inc. has grown to include five brands and about 3,100 stores globally. Gap’s style is rooted in simple, easy to wear pieces that form the foundation of any wardrobe – the jean, the khaki, and the pocket tee. The brand epitomizes cool, confident, casual style, which transcends trend, making it easy for people to express their personal style.

Accomplished Executives to Lead Comprehensive China Strategy

Redmond Yeung joins Gap Inc., after serving as President and Chief Operating Officer of China and Asia Pacific for Best Buy. As President, China, he will lead business development and real estate strategy. His experience includes a number of general management roles for Ports brand, a large international women’s apparel chain, with more than 350 stores in China.

Said Yeung, "I’m delighted to join Gap Inc. not only because the company holds brands that have the strength and potential to appeal to Chinese customers but also because the company is committed to the environment and creating responsible working conditions – something that is incredibly appealing.”

In his previous role, Lorenzo Moretti was Executive Vice President and Chief Operating Officer of China and President, East China, of Tesco, the global supermarket chain. Moretti, who also was responsible for Marks & Spencer’s expansion into Asia, will focus on all store operations and infrastructure development.

"Joining Gap Inc. is an exciting opportunity,” said Moretti. "I look forward to building a business that will appeal to Chinese customers as we offer the cool, confident, casual, American-inspired product that has made Gap part of our global culture.”

Earlier this week, Gap Inc. announced that Katherine Tsang, chairperson for China at Standard Chartered PLC, a leading international bank, has been appointed to the Company’s Board of Directors, effective August 16, 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,” "project,” and similar expressions also identify forward-looking statements. Forward-looking statements include, without limitation, statements regarding (i) store openings in China, including locations and timing; (ii) the launch of an online shopping site in China; and (iii) successfully integrating our brands over time into China’s retail market.

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 the company will be unable to successfully open, operate and grow the Gap stores planned for China; the risk that the company’s ecommerce partner will not be able to successfully launch, operate or expand the planned online shopping site in China; the risk that the company will be unsuccessful in gauging Chinese 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 identifying and negotiating new store or other facility locations effectively; the risk that the company will be unsuccessful in implementing its strategic, operating and people initiatives; 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 foreign countries, or an inability to secure sufficient manufacturing capacity may disrupt the company’s supply chain or 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 the company’s reputation or operations; and the risk that changes in the Chinese regulatory or administrative landscape could adversely affect the company’s strategies or 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 30, 2010.

These forward-looking statements are based on information as of June 23^rd, 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. For more information, please visit www.gapinc.com.