The Gap 2008 Annual Report Download - page 17

Athleta. Acquired in September 2008, Athleta offers customers high quality and performance-driven women’s
sports and active apparel and footwear that is stylish and functional for a variety of activities, including golf,
running, skiing/snowboarding, tennis, and yoga. Customers can purchase Athleta product, as well as an
assortment of products from leading brands in women’s active wear, online or through the catalog.
Certain financial information about international operations is set forth under the heading “Segment Information”
in Note 16 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K.
Our stores offer a shopper-friendly environment with an assortment of casual apparel and accessories that
emphasize style, quality, and good value. The range of merchandise displayed in each store varies depending on
the selling season and the size and location of the store.
Our stores generally are open seven days per week (where permitted by law) and most holidays. All sales are
tendered for cash, personal checks, debit cards, or credit cards. We also issue and redeem gift cards through our
brands. Gap, Banana Republic, and Old Navy each has a private label credit card program and a co-branded credit
card program through which frequent customers receive benefits. Private label and co-branded credit cards are
underwritten by a third-party financing company.
Merchandise Vendors
We purchase private label merchandise from approximately 600 vendors and non-private label merchandise from
approximately 300 vendors. Our vendors have facilities in approximately 60 countries. No vendor accounted for
more than 3 percent of the dollar amount of our total fiscal 2008 purchases. Of our merchandise sold during fiscal
2008, approximately 3 percent of all units (representing approximately 3 percent of total cost) were produced
domestically while the remaining 97 percent of all units (representing approximately 97 percent of total cost) were
produced outside the United States. Approximately 23 percent of our total merchandise units (representing
approximately 27 percent of total cost) were produced in China. Events causing disruption of imports from China or
other foreign countries, including the imposition of additional import restrictions, or vendors potentially failing
due to the current economic downturn or an inability to maintain an acceptable level of operating capital, could
have an adverse effect on our operations. Substantially all of our foreign purchases of merchandise are negotiated
and paid for in U.S. dollars. Also see the section entitled “Risk Factors—Trade matters may disrupt our supply
chain” in Item 1A of this Form 10-K.
Seasonal Business
Our business follows a seasonal pattern, with sales peaking over a total of about eight weeks during the holiday
(November through December) period. During fiscal 2008, the period accounted for approximately 21 percent of
our net sales.
Brand Building
Our ability to develop and evolve our existing brands is a key to our success. We believe our distinct brands are
among our most important assets. With the exception of Piperlime, virtually all aspects of brand development
from product design and distribution, to marketing, merchandising and shopping environments are controlled by
us. With respect to Piperlime, we control all aspects of brand development except for product design. We continue
to invest in our brands and enhance the customer experience through the remodeling of existing stores, the
opening of new stores, the closure of under-performing stores, and a focus on customer service.
Trademarks and Service Marks
Gap, GapKids, babyGap, GapBody, Banana Republic, Old Navy, Piperlime, and Athleta trademarks and service
marks, and certain other trademarks, have been registered, or are the subject of pending trademark applications
with the United States Patent and Trademark Office and with the registries of many foreign countries and/or are
protected by common law.
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