The Gap 2010 Annual Report Download - page 14

Athleta. Athleta products are sold in two channels: full price retail stores and online. 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 and snowboarding, tennis, and
yoga. In May 2010, we opened a test store in Mill Valley, California, and in January 2011, we opened a flagship store
in San Francisco, California. Customers can purchase Athleta product, as well as an assortment of products from
leading brands in women’s active-wear, online at athleta.com, through the catalog, or in our stores. Beginning in
2010, customers in select international countries can shop online at athleta.com.
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 have 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 provided by a third-party financing company.
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. Stores are generally open seven days per week (where
permitted by law) and most holidays.
We ended fiscal year 2010 with 3,246 Company-operated and franchise store locations. For more information on
the number of stores by brand and region, see the table in “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” included as Part II, Item 7 of this Form 10-K.
Certain financial information about international operations is set forth under the heading “Segment Information”
in Note 14 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K.
Merchandise Vendors
We purchase private label merchandise from approximately 590 vendors and non-private label merchandise from
approximately 430 vendors. Our vendors have facilities in approximately 50 countries. No vendor accounted for
more than 3 percent of the dollar amount of our total fiscal 2010 purchases. Of our merchandise sold during fiscal
2010, approximately 1 percent of all units (representing approximately 2 percent of total cost) were produced
domestically, while the remaining 99 percent of all units (representing approximately 98 percent of total cost)
were produced outside the United States. Approximately 27 percent of our merchandise units (representing
approximately 30 percent of total cost) were produced in China. Product cost increases or events causing
disruption of imports from China or other foreign countries, including the imposition of additional import
restrictions or vendors potentially failing due to political, financial, or regulatory issues, 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 sections entitled “Risk Factors—Trade matters may disrupt our supply chain” and
“Risk Factors—Our Products are subject to risks associated with global sourcing and manufacturing, including
increased product costs” 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
end-of-year holiday period.
Brand Building
Our ability to develop and evolve our existing brands is 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
Gap Inc. employees. With respect to Piperlime, we control all aspects of brand development except for product
design related to third-party products. 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,
international expansion, the enhancement of our online shopping sites, additional investments in marketing, and
continued focus on customer service.
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