Press Release

10/09/2007

GAP INC. EXPANDS INTERNATIONAL PRESENCE WITH FRANCHISE AGREEMENT IN THE PHILIPPINES

Franchisee Plans to Open a Dozen Gap and Banana Republic Stores in the Philippines by 2012

SAN FRANCISCO – Oct. 9, 2007 Gap Inc. (NYSE: GPS) today announced a franchise agreement to introduce the Gap and Banana Republic brands to the Philippines. Over the next five years, Gap Inc.’s franchise partner – Rustan Group of Companies – plans to open a combined total of approximately eight Gap stores and four Banana Republic stores throughout the Philippines.

The first Gap store is expected to open by the end of this year, and the first Banana Republic stores by spring 2008. All stores are scheduled to be open by 2012. 

“The Philippines represents a natural market for Gap Inc. to expand its international presence,” said Ron Young, senior vice president of international strategic alliances for Gap Inc. “The country has a strong, steadily growing economy, and consumers in this market have a great interest in iconic apparel brands such as ours.”

Gap Inc. will leverage the Rustan Group’s local operational expertise, and will provide access to Gap and Banana Republic’s clothing and accessories. In addition, the Rustan Group of Companies will hold exclusive rights to operate Gap and Banana Republic stores in the Philippines, will purchase merchandise from Gap Inc. or suppliers designated by Gap Inc., and must adhere to Gap Inc.’s quality standards to preserve the reputation of the Gap and Banana Republic brands.

“We’re pleased to have forged a relationship with such an excellent local partner,” continued Mr. Young. “In addition to strong operational expertise and a deep understanding of their local customer base, the Rustan Group of Companies has a track record of successfully introducing well-known fashion and apparel brands to international markets.”

Gap Inc. directly operates Gap brand stores in six countries and Banana Republic stores in three countries. Today’s announcement follows previously-announced franchise agreements to open Gap and Banana Republic stores in Bahrain, Indonesia, Kuwait, Malaysia, Oman, Qatar, Saudi Arabia, Singapore, South Korea, Turkey and the United Arab Emirates.

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,” and similar expressions also identify forward-looking statements. Forward-looking statements include, without limitation, statements regarding the timing and number of stores that are expected to open 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 number of Gap and/or Banana Republic branded apparel and accessories stores planned for the Philippines; 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 in the U.S. and 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 trade matters, events causing disruptions in product shipments from China and other foreign countries, or IT systems changes may disrupt the company’s supply chain 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 3, 2007. Readers should also consult the company’s Quarterly Report on Form 10-Q for the fiscal quarter ended August 4, 2007.

These forward-looking statements are based on information as of October 9, 2007, and 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 2006 sales were $15.9 billion. Gap Inc. operates more than 3,100 stores in the United States, the United Kingdom, Canada, France, Ireland and Japan. In addition, Gap Inc. is expanding its international presence with franchise agreements for Gap and Banana Republic in Asia and the Middle East. For more information, please visit gapinc.com.

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