The Gap 2014 Annual Report Download - page 17

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5
Sonia Syngal, 45, Executive Vice President, Global Supply Chain and Product Operations since February 2015;
Executive Vice President, Global Supply Chain from November 2013 to January 2015; Senior Vice President, Old
Navy International from February 2013 to November 2013; Senior Vice President and Managing Director, Europe
from May 2011 to February 2013; Senior Vice President and General Manager, International Outlets from January
2010 to May 2011; Vice President of Global Production, Supply Chain - Outlet from July 2006 to January 2010;
Vice President, Corporate Sourcing from July 2004 to July 2006.
Item 1A. Risk Factors.
Our past performance may not be a reliable indicator of future performance because actual future results and
trends may differ materially depending on a variety of factors, including but not limited to the risks and
uncertainties discussed below. In addition, historical trends should not be used to anticipate results or trends in
future periods.
We must successfully gauge apparel trends and changing consumer preferences to succeed.
Our success is largely dependent upon our ability to gauge the tastes of our customers and to provide
merchandise that satisfies customer demand in a timely manner. However, lead times for many of our design and
purchasing decisions may make it more difficult for us to respond rapidly to new or changing apparel trends or
consumer acceptance of our products. The global apparel retail business fluctuates according to changes in
consumer preferences, dictated in part by apparel trends and season. To the extent we misjudge the market for
our merchandise or the products suitable for local markets or fail to execute trends and deliver product to market
as timely as our competitors, our sales will be adversely affected, and the markdowns required to move the
resulting excess inventory will adversely affect our operating results. For example, during fiscal 2014, product
acceptance at Gap brand, in particular, was below expectations, and as a result, our financial results were
negatively impacted.
Global economic conditions and the impact on consumer spending patterns could adversely impact our
results of operations.
The Company’s performance is subject to global economic conditions and their impact on levels of consumer
spending worldwide. Some of the factors that may influence consumer spending include high levels of
unemployment, higher consumer debt levels, reductions in net worth based on market declines and uncertainty,
home foreclosures and reductions in home values, fluctuating interest rates and credit availability, government
austerity measures, fluctuating fuel and other energy costs, fluctuating commodity prices, and general uncertainty
regarding the overall future economic environment. Consumer purchases of discretionary items, including our
merchandise, generally decline during periods when disposable income is adversely affected or there is economic
uncertainty.
Adverse economic changes in any of the regions in which we and our franchisees sell our products could reduce
consumer confidence, and thereby could negatively affect earnings and have a material adverse effect on our
results of operations. In challenging and uncertain economic environments, we cannot predict whether or when
such circumstances may improve or worsen, or what impact, if any, such circumstances could have on our
business, results of operations, cash flows, and financial position.
Our business is highly competitive.
The global apparel retail industry is highly competitive. We and our franchisees 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 face a variety of competitive challenges including:
• anticipating and quickly responding to changing apparel trends and customer demands;
• attracting customer traffic both in stores and online;
• competitively pricing our products and achieving customer perception of value;
• maintaining favorable brand recognition and effectively marketing our products to customers in several diverse
market segments and geographic locations;
• anticipating and responding to changing customer shopping preferences and practices, including the increasing
shift to digital brand engagement, social media communication, and online shopping;
• developing innovative, high-quality products in sizes, colors, and styles that appeal to customers of varying age
groups and tastes; and