The Gap 2014 Annual Report Download - page 15

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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 and Intermix, 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 and Intermix, we control all aspects of brand
development except for product design related to third-party products. We continue to invest in our business and
enhance the customer experience through significant investments in marketing and our omni-channel capabilities,
enhancement of our online shopping sites, international expansion, remodeling of existing stores, and investments
in our supply chain.
Trademarks and Service Marks
Gap, GapKids, babyGap, GapMaternity, GapBody, GapFit, Banana Republic, Old Navy, Piperlime, Athleta, and
Intermix 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.
Franchising
We have franchise agreements with unaffiliated franchisees to operate Gap, Banana Republic, and Old Navy
stores in a number of countries throughout Asia, Australia, Europe, Latin America, the Middle East, and Africa.
Under these agreements, third parties operate, or will operate, stores that sell apparel and related products under
our brand names. For additional information on risks related to our franchise business, see the sections entitled
“Risk Factors—Our efforts to expand internationally may not be successful” and “Risk Factors—Our franchise
business is subject to certain risks not directly within our control that could impair the value of our brands” in
Item 1A of this Form 10-K.
Inventory
The nature of the retail business requires us to carry a significant amount of inventory, especially prior to peak
holiday selling season when we, along with other retailers, generally build up inventory levels. We maintain a large
part of our inventory in distribution centers. 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 or colors) and we
primarily use promotions and markdowns to clear merchandise. Also see the sections entitled “Risk Factors—We
must successfully gauge apparel trends and changing consumer preferences to succeed” and "Risk Factors—If we
are unable to manage our inventory effectively, our gross margins could be adversely affected" in Item 1A of this
Form 10-K.
Competitors
The global apparel retail industry is highly competitive. We compete with local, national, and global apparel
retailers. We are also faced with competition in European, Japanese, Chinese, 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” in Item 1A of this
Form 10-K.
Employees
As of January 31, 2015, we had a workforce of approximately 141,000 employees, which includes a combination
of part-time and full-time employees. We also hire seasonal employees, primarily during the peak end-of-year
holiday period.
To remain competitive in the apparel retail industry, we must attract, develop, and retain skilled employees in our
design, merchandising, marketing, and other functions. 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—The failure to attract and retain key personnel, or effectively manage succession, could have an
adverse impact on our results of operations” in Item 1A of this Form 10-K.