Press Release

GAP INC. REPORTS AUGUST SALES DOWN 5 PERCENT; COMPARABLE STORE SALES DOWN 9 PERCENT

SAN FRANCISCO − September 1, 2005 − Gap Inc. (NYSE: GPS) today reported net sales of $1.17 billion for the four-week period ended August 27, 2005, which represents a 5 percent decrease compared with net sales of $1.23 billion for the same period ended August 28, 2004. The company’s comparable store sales for August 2005 decreased 9 percent compared with a 1 percent decrease in August 2004.

Comparable store sales by division for August 2005 were as follows:

•	Gap North America: negative 7 percent versus negative 1 percent last year
•	Banana Republic North America: negative 6 percent versus flat last year
•	Old Navy North America: negative 11 percent versus negative 1 percent last year
•	Gap International: negative 6 percent versus negative 10 percent last year

“The negative trends that we discussed on our second quarter earnings call continued and as such, August sales results were disappointing and merchandise margins were slightly below last year,” said Sabrina Simmons, Senior Vice President, Treasury and Investor Relations.

Year-to-date net sales of $8.5 billion for the thirty weeks ended August 25, 2005, decreased 1 percent compared with net sales of $8.6 billion for the same period ended August 28, 2004. The company’s year-to-date comparable store sales decreased 5 percent compared with a 3 percent increase in the prior year.

As of August 25, 2005, Gap Inc. operated 3,050 store locations compared with 3,016 store locations last year.

For more detailed information, please call 800-GAP-NEWS to listen to Gap Inc.’s monthly sales recording. International callers may call 706-634-4421.

Forward-Looking Statements
This press release and related recording contain 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 limitations, statements regarding inventory per square foot for the third quarter of 2005.

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 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 identifying and negotiating new store locations effectively; the risk that comparable store sales and margins will experience fluctuations; 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 and structure in future periods; 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 January 29, 2005. Readers should also consult the Company’s Quarterly Report on Form 10-Q for fiscal quarter ended July 30, 2005. 

Future economic and industry trends that could potentially impact net sales and profitability are difficult to predict. These forward-looking statement are based on information as of September 1, 2005, 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.

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