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Gap to invest further in its online business

23
Oct '09
Determined to build upon the success of its Old Navy brand this year, Gap Inc. will present investors with an update on its strategies to regain market share and invest further in its online and international businesses.

Among specific announcements, Gap brand will return to television advertising in November, following a two-year absence. The company will also continue to invest internationally, including:
opening its first Gap store in China in 2010; expanding its Outlet store presence internationally; and launching online businesses in Canada and the United Kingdom in 2010.

“Old Navy's performance this year has shown what we can deliver through consistent products,
re-invigorated marketing, and an enhanced store environment,” said Glenn Murphy, chairman and CEO of Gap Inc. “With our improved economic model, we're ready to step up our investments and strategies to regain market share and expand our international platform.”

“We are positioned well due to our focus over the last two years on delivering healthy merchandise margins, maintaining costs, generating strong free cash flow and improving our return on invested capital,” said Sabrina Simmons, the company's chief financial officer. “We'll bring this same financial rigor to managing the next phase of our strategy to improve our results going forward.”

In addition to Murphy and Simmons, today's investor meeting at the company's New York office will include the presidents of Gap, Banana Republic and Old Navy, as well as the leader of the company's online business. Highlights of the business updates follow:

Old Navy: Tom Wyatt
Old Navy is building on the work it began last year to re-establish itself as a fun, family value brand. This strategy has helped stabilize the business and strengthen its brand positioning. With its unique and fun Supermodelquin advertising campaign, Old Navy is becoming top of mind for consumers. To work towards steadily winning more share of the value market, Old Navy will continue to offer quality products at consistent, compelling prices. In addition, Old Navy will focus on improving the experience for customers within the store through a recently unveiled new store design, which will be in about 50 stores by the end of 2009.

Gap brand: Marka Hansen
Gap is focused on regaining relevance with customers by concentrating on product, store experience, and creative marketing campaigns. Like the recent 1969 premium denim relaunch, Gap brand will continue to focus on reinventing key product categories through 2010, such as khakis and pants. To enhance store sales productivity, Gap will continue to optimize the size of its stores. It will also continue to remodel stores to improve the shopping experience. Gap will also return to television advertising in November.

Banana Republic: Jack Calhoun
With new merchandising and marketing leaders in place, Banana Republic is focused on better connecting with its target customer base. It will do this by rebalancing its product assortment to reflect its affordable luxury brand proposition, and through its marketing, work to reignite the core essence of the brand. The brand leaders recognize the product and marketing became “too serious” and “too heavily work focused,” and are working to create a more versatile wardrobe offering for the coming seasons that balances products more evenly across weekend, work and going out occasions.


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