Press Release

GAP INC. EXPANDS INTO MEXICO AND OPENS 100TH FRANCHISE STORE ABROAD

Company Also Adds Egypt and Jordan to List of Franchise Countries

SAN FRANCISCO – September 18, 2008 – In another move to expand its international presence, Gap Inc. (NYSE: GPS) today announced that Mexico’s leading department store chain will have exclusive rights to sell Gap brand merchandise in a franchise “store within a store” concept. 

The company signed a franchise agreement with Distribuidora Liverpool, S.A. DE C.V., a proven partner with extensive retail experience in Mexico, and plans to begin selling products in the spring of 2009. Gap Inc. had previously worked with Liverpool through a wholesale agreement and during that time introduced Gap brand apparel in a limited manner to customers in Mexico. 

“As the 10th largest apparel market in the world, Mexico is an important country for us as we expand our franchise presence to Latin America,” said Ron Young, senior vice president of international strategic alliances for Gap Inc. “Our franchise program continues to build momentum with 21 countries and 100 stores. Partnering with local experts in regions throughout the world has been extremely beneficial, allowing us to introduce our brands to new customers in relevant and exciting ways.” 

The company also announced today that it has expanded its relationship with Fawaz Alhokair Group to include franchise agreements for Gap and Banana Republic in Egypt and Jordan. Fawaz Alhokair Group recently opened Gap and Banana Republic stores to great fanfare in Saudi Arabia and will now open stores in Egypt and Jordan over the next five years. The first Gap stores are expected to open in Egypt and Jordan for the 2008 holiday season. The first Banana Republic stores are expected to open in Jordan in the spring of 2009 and in Egypt for the 2009 fall season.

Since the Gap Inc. franchise program began two years ago, more than 70 Gap franchise stores and nearly 30 Banana Republic franchise stores have opened. There are Gap franchise stores open in Bahrain, Greece, Indonesia, Korea, Kuwait, Oman, Qatar, Malaysia, 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 and Russia over the next 5 years.

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 franchise store openings.

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 franchisees will be unable to successfully open, operate and grow the planned Gap and/or Banana Republic branded apparel and accessories stores; 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 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 August 2, 2008.

These forward-looking statements are based on information as of September 19, 2008. 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 and Piperlime brand names. Fiscal 2007 sales were $15.8 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 for Asia, Europe, and the Middle East. For more information, please visit gapinc.com.