The Gap 2009 Annual Report Download - page 22

Franchising
We have franchise agreements with unaffiliated franchisees to operate Gap and/or Banana Republic stores in
Australia, Bahrain, Bulgaria, Croatia, Cyprus, Egypt, Greece, Indonesia, Israel, Jordan, Kuwait, Malaysia, Mexico,
Oman, Philippines, Qatar, Romania, Russia, Saudi Arabia, Singapore, South Korea, Thailand, Turkey, and
United Arab Emirates. Under these agreements, third parties operate, or will operate, stores that sell apparel
purchased from us under our brand names. While we expect this will be a small part of our business in the near
future, we plan over time to continue increasing the number of countries in which we enter into these types of
arrangements as part of our efforts to expand internationally. For additional information on risks related to our
franchise business, see the section entitled “Risk Factors—Our efforts to expand internationally may not be
successful and could impair the value of our brands” in Item 1A of this Form 10-K.
Inventory
The cyclical nature of the retail business requires us to carry a significant amount of inventory, especially prior to
peak selling seasons when we and other retailers generally build up our inventory levels. We review our inventory
levels in order to identify slow-moving merchandise and broken assortments (items no longer in stock in a
sufficient range of sizes) and use markdowns to clear merchandise. Because we do not carry much replenishment
inventory in our stores, much of our inventory is maintained in distribution centers. Also see the section entitled
“Risk Factors—We must successfully gauge fashion trends and changing consumer preferences to succeed” in
Item 1A of this Form 10-K.
Competitors
The global specialty apparel retail industry is highly competitive. We compete with local, national, and global
department stores, specialty and discount store chains, independent retail stores, and online businesses that
market similar lines of merchandise. We are also faced with competition in European, Japanese, and Canadian
markets from established regional and national chains, and our franchisees face significant competition in the
markets in which they operate. Also see the section entitled “Risk Factors—Our business is highly competitive and
depends on consumer spending patterns” in Item 1A of this Form 10-K.
Employees
As of January 30, 2010, we had a work force of approximately 135,000 employees, which includes a combination
of part- and full-time employees. We hire seasonal employees primarily during the peak holiday period.
To remain competitive in the apparel retail industry, we must attract, develop, and retain skilled employees,
including executives. Competition for such personnel is intense. Our success is dependent to a significant degree
on the continued contributions of key employees. Also see the section entitled “Risk Factors—We must successfully
gauge fashion trends and changing consumer preferences to succeed” in Item 1A of this Form 10-K.
Available Information
We make available on our website, gapinc.com, under “Investors, Financials, SEC Filings,” free of charge, our annual
reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those
reports as soon as reasonably practicable after we electronically file or furnish them to the U.S. Securities and
Exchange Commission (“SEC”).
Our Code of Business Conduct, Board of Directors Committee Charters (Audit and Finance, Compensation and
Management Development, and Governance and Nominating Committees), and Corporate Governance Guidelines
are also available on our website. The Code of Business Conduct can be found at gapinc.com, under “Investors,
Corporate Compliance, Code of Business Conduct.” Any amendments and waivers to the code will also be available
on the website. The Committee Charters and Governance Guidelines can be found on our website under
“Investors, Governance.”
6Gap Inc. Form 10-K