The Gap, Inc. (GAP) 8-K Gap Inc. Reports Fourth Quarter and Full Year Results for Fiscal Year 2011

Exhibit 99.1

GAP INC. REPORTS FOURTH QUARTER AND FULL YEAR RESULTS FOR FISCAL YEAR 2011

Sets Sights on Improving Business in 2012 with Focus on North America

SAN FRANCISCO – February 23, 2012 – Gap Inc. (NYSE:GPS) today reported fourth quarter and full year results for fiscal year 2011 and provided commentary on 2012.

Fourth Quarter Results

For the fourth quarter of fiscal year 2011, which ended January 28, 2012, the company reported net income of $218 million, or $0.44 per share on a diluted basis. This compares with net income of $365 million, or $0.60 per share on a diluted basis, in the same period last year.

Fourth quarter net sales were $4.3 billion compared with $4.4 billion for the fourth quarter of last year. The company’s fourth quarter comparable sales, which include the associated comparable online sales, were down 4 percent compared with a 1 percent increase in the fourth quarter last year.

Fiscal Year Results

For fiscal year 2011, which ended January 28, 2012, the company reported net income of $833 million, or $1.56 per share on a diluted basis — a decrease of 17 percent compared with last year. This compares with net income of $1.2 billion in the same period last year.

Net sales for fiscal year 2011 were $14.5 billion, a decrease of 1 percent compared with net sales of $14.7 billion last year. The company’s fiscal year 2011 comparable sales, which include the associated comparable online sales, were down 4 percent compared with a 2 percent increase last year.

“In spite of 2011 earnings being below last year, we’re pleased with the progress we made against our long-term strategic plan, including growing our online business and expanding internationally,” said Glenn Murphy, chairman and chief executive officer of Gap Inc. “There’s no doubt that improving our performance, especially in our base businesses, is the top priority in 2012, and we’re confident this is the right time to invest wisely to win back customers.”

In fiscal year 2011, Gap Inc. improved its performance in a number of areas, including a 20 percent increase in net sales in its Direct division and a 45 percent net sales increase in its franchise business. The company now operates stores in 39 countries having entered eight new franchise markets in fiscal year 2011. Specific initiatives also began to gain steam, with 14 Gap stores in China, on the way to a total of about 45 stores by the end of fiscal year 2012, and 10 Athleta stores on the way to a total of 50 by the end of fiscal year 2013.

As in past years, the company also outlined investment plans for 2012. In addition to supporting its well-established global growth vehicles, the company indicated it will make targeted investments in product, marketing, and e-commerce to support improvement in North America. Given its record of strong financial management, the company will manage its investments commensurate with business performance.

In related news announced yesterday, Gap Inc. has appointed two new creative leaders to support its Old Navy and Gap divisions. Jill Stanton, a seasoned executive with experience leading product design and marketing, will serve as creative advisor for Old Navy. In addition, Liz Meltzer will join the company as senior vice president of Gap International Merchandising, bringing deep global product experience to the brand.

Additional Fiscal Year 2011 Financial Performance Highlights

• Generated $815 million in free cash flow and reinforced its commitment to deliver value by returning $2.3 billion to shareholders through share repurchases and dividends.

• The International and Direct divisions together represented 26 percent of net sales for the year, indicating progress on the company’s stated goal of reaching 30 percent of net sales from these divisions by the end of 2013.

• Delivered higher Average Unit Retails throughout the year enabled by disciplined inventory management.

• Tightly managed operating expenses while continuing to invest in long-term growth initiatives.

Sales Results

Comparable sales for the fourth quarter of fiscal year 2011, including the associated comparable online sales, were as follows:

• Gap North America: negative 3 percent versus flat last year

• Banana Republic North America: flat versus positive 2 percent last year

• Old Navy North America: negative 6 percent versus positive 2 percent last year

• International: negative 8 percent versus positive 1 percent last year

Comparable sales for fiscal year 2011, including the associated comparable online sales, were as follows:

• Gap North America: negative 4 percent versus flat last year

• Banana Republic North America: negative 1 percent versus positive 3 percent last year

• Old Navy North America: negative 3 percent versus positive 3 percent last year

• International: negative 7 percent versus positive 2 percent last year

The following tables detail Gap Inc.’s fourth quarter and fiscal year net sales:

($ in millions) Quarter Ended January 28, 2012	Gap		Old Navy		Banana Republic		Franchise and Wholesale (3)		Piperlime and Athleta		Total		Percentage of Net Sales
U.S. (1)	$	935	$	1,309	$	616	$	—	$	—	$	2,860		67	%
Canada		98		109		59		—		—		266		6
Europe		201		—		17		16		—		234		6
Asia		331		—		41		23		—		395		9
Other regions		—		—		—		39		—		39		1
Total Stores reportable segment		1,565		1,418		733		78		—		3,794		89
Direct reportable segment (2)		139		198		63		—		89		489		11
Total	$	1,704	$	1,616	$	796	$	78	$	89	$	4,283		100	%
($ in millions) Quarter Ended January 29, 2011	Gap		Old Navy		Banana Republic		Franchise and Wholesale (3)		Piperlime and Athleta		Total		Percentage of Net Sales
U.S. (1)	$	998	$	1,441	$	619	$	—	$	—	$	3,058		70	%
Canada		101		123		58		—		—		282		7
Europe		215		—		12		12		—		239		5
Asia		300		—		37		17		—		354		8
Other regions		—		—		—		27		—		27		1
Total Stores reportable segment		1,614		1,564		726		56		—		3,960		91
Direct reportable segment (2)		120		161		54		—		69		404		9
Total	$	1,734	$	1,725	$	780	$	56	$	69	$	4,364		100	%
($ in millions) Fiscal Year Ended January 28, 2012	Gap		Old Navy		Banana Republic		Franchise and Wholesale (3)		Piperlime and Athleta		Total		Percentage of Net Sales
U.S. (1)	$	3,231	$	4,644	$	2,060	$	—	$	—	$	9,935		68	%
Canada		333		392		193		—		—		918		6
Europe		702		—		54		69		—		825		6
Asia		966		—		131		79		—		1,176		8
Other regions		—		—		—		135		—		135		1
Total Stores reportable segment		5,232		5,036		2,438		283		—		12,989		89
Direct reportable segment (2)		433		638		188		—		301		1,560		11
Total	$	5,665	$	5,674	$	2,626	$	283	$	301	$	14,549		100	%
($ in millions) Fiscal Year Ended January 29, 2011	Gap		Old Navy		Banana Republic		Franchise and Wholesale (3)		Piperlime and Athleta		Total		Percentage of Net Sales
U.S. (1)	$	3,454	$	4,945	$	2,084	$	—	$	—	$	10,483		71	%
Canada		341		427		190		—		—		958		7
Europe		703		—		36		47		—		786		5
Asia		872		—		118		59		—		1,049		7
Other regions		—		—		—		89		—		89		1
Total Stores reportable segment		5,370		5,372		2,428		195		—		13,365		91
Direct reportable segment (2)		365		533		155		—		246		1,299		9
Total	$	5,735	$	5,905	$	2,583	$	195	$	246	$	14,664		100	%

(1) U.S. includes the United States and Puerto Rico.

(2) Online sales shipped from distribution centers located outside the U.S. were $43 million ($31 million for Canada and $12 million for Europe) and $30 million ($22 million for Canada and $8 million for Europe) for the 13 weeks ended January 28, 2012 and January 29, 2011, respectively. Online sales shipped from distribution centers located outside the U.S. were $127 million ($89 million for Canada and $38 million for Europe) and $42 million ($30 million for Canada and $12 million for Europe) in fiscal 2011 and 2010, respectively.

(3) Franchise and wholesale sales were $78 million ($68 million for Gap and $10 million for Banana Republic) and $56 million ($50 million for Gap and $6 million for Banana Republic) for the 13 weeks ended January 28, 2012 and January 29, 2011, respectively. Franchise and wholesale sales were $283 million ($247 million for Gap and $36 million for Banana Republic) and $195 million ($171 million for Gap and $24 million for Banana Republic) in fiscal 2011 and 2010, respectively.

Additional 2011 Results and 2012 Outlook

Earnings per Share

The company expects diluted earnings per share to be in the range of $1.75 - $1.80 for fiscal year 2012.

Depreciation and Amortization

Fiscal year 2011 depreciation and amortization expense, net of amortization of lease incentives, was $506 million.

For fiscal year 2012, the company expects depreciation and amortization expense, net of amortization of lease incentives, to be about $475 million.

Operating Expenses

Fourth quarter operating expenses were $1.0 billion, or 24.1 percent of net sales. Marketing expenses for the fourth quarter were $166 million.

Fiscal year 2011 operating expenses were $3.8 billion, or 26.4 percent of net sales. Marketing expenses for the full year were $548 million, up $32 million compared with last year.

Operating Margin

The company expects that operating margin for fiscal year 2012 will be about 10 percent.

Effective Tax Rate

The effective tax rate was 37.7 percent for the fourth quarter of fiscal year 2011. The effective tax rate for fiscal year 2011 was 39.2 percent.

For fiscal year 2012, the company expects the effective tax rate to be about 39.5 percent.

Inventory

On a year-over-year basis inventory dollars per store were down 0.8 percent at the end of the fourth quarter of fiscal year 2011.

For fiscal year 2012, the company expects inventory dollars per store at the end of the first quarter to be about flat on a year-over-year basis. Please see the Financials section under the Investors tab onwww.gapinc.com for the company’s explanation of numerical range guidance.

Cash and Cash Equivalents

The company ended the year with $1.9 billion in cash and cash equivalents. For fiscal year 2011, free cash flow, defined as net cash provided by operating activities less purchases of property and equipment, was $815 million compared with $1.2 billion last year. Please see the reconciliation of free cash flow, a non-GAAP financial measure, to the GAAP financial measure in the tables at the end of this release.

Share Repurchases

During the fourth quarter of fiscal year 2011, the company repurchased about 4.5 million shares for $83 million. For fiscal year 2011, the company repurchased about 111 million shares for a total of $2.1 billion.

In a separate press release today, the company announced that its Board of Directors approved a new $1 billion share repurchase authorization that replaces the previously announced authorization.

Dividends

The company paid a dividend of $0.1125 per share during the fourth quarter of fiscal year 2011.

In a separate press release today, the company announced that its Board of Directors approved a plan to increase the annual dividend per share from $0.45 in fiscal year 2011 to $0.50 for fiscal year 2012.

Capital Expenditures

Fiscal year 2011 capital expenditures were $548 million.

For fiscal year 2012, the company expects capital spending to increase about 10 percent to approximately $600 million in support of its outlined strategies.

Real Estate

The company ended fiscal year 2011 with 3,263 store locations in 39 countries, 3,036 of which are company operated. Net square footage of company-operated stores decreased 2.6 percent from the end of fiscal year 2010. This reinforces Gap Inc.’s strategy to optimize its square footage.

In fiscal year 2012, the company expects to open about 125 company-operated stores, net of repositions, 55 of which are international. The company expects that it will close about 115 company-operated stores, net of repositions. The closures are weighted towards Gap North America, consistent with the company’s previously-stated strategy. Net square footage for company-operated stores is expected to decrease by about 1 percent by the end of fiscal year 2012 compared with the end of fiscal year 2011.

	Quarter Ended January 28, 2012
	Store Locations Beginning of Q4		Store Locations Opened		Store Locations Closed		Store Locations End of Q4		Square Feet (millions)
Gap North America		1,086		7		50		1,043		10.7
Gap Europe		191		2		—		193		1.7
Gap Asia		141		11		—		152		1.5
Old Navy North America		1,022		11		17		1,016		18.1
Banana Republic North America		583		3		5		581		4.9
Banana Republic Asia		29		2		—		31		0.2
Banana Republic Europe		9		1		—		10		0.1
Athleta North America		4		6		—		10		—
Company-operated stores total		3,065		43		72		3,036		37.2
Franchise		211		16		—		227		NA
Total		3,276		59		72		3,263		37.2

Webcast and Conference Call Information

Katrina O’Connell, vice president of Corporate Finance and Investor Relations at Gap Inc., will host a summary of the company’s fourth quarter fiscal year 2011 results during a live conference call and real-time webcast at approximately 5 p.m. Eastern Time today. Ms. O’Connell will be joined by Glenn Murphy, Gap Inc. chairman and chief executive officer, and Sabrina Simmons, Gap Inc. chief financial officer.

To access the conference call, please dial (800) 374-1731, or (706) 679-5876 for international callers. The webcast can be accessed from the Financial News and Events page of the Investors section atwww.gapinc.com. A replay of the call will be available onwww.gapinc.com.

February Sales

The company will report February sales on March 1, 2012.

Forward-Looking Statements

This press release and related conference call and webcast contain forward-looking statements within the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. All statements other than those that are purely historical are forward-looking statements. Words such as “expect,” “anticipate,” “believe,” “estimate,” “intend,” “plan,” “project,” and similar expressions also identify forward-looking statements. Forward-looking statements include statements regarding the following:

• growing online and expanding internationally;

• improving business performance in 2012;

• targeted investments to support improvement in North America;

• delivering value and returning excess cash to shareholders through repurchases and dividends;

• future Direct and international share of net sales;

• future Athleta stores;

• earnings per share for fiscal year 2012;

• depreciation and amortization for fiscal year 2012;

• operating margin for fiscal year 2012;

• effective tax rate for fiscal year 2012;

• inventory per store at the end of the first quarter of fiscal year 2012;

• dividend amounts and timing in fiscal year 2012;

• capital expenditures for fiscal year 2012;

• optimizing square footage;

• store openings and closings for fiscal year 2012 and weightings by division;

• real estate square footage for fiscal year 2012;

• future international growth, including online, outlet, franchise, and stores in China;

• global IT platform;

• consistent product execution;

• improving sales with healthy merchandise margins;

• investing in the business while maintaining discipline;

• stabilization of the base businesses;

• Average Unit Costs in the second half of 2012;

• leveraging operating expenses in 2012;

• pace of share repurchases in 2012; and

• growing earnings per share while strategically reinvesting in the business.

Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause the company’s actual results to differ materially from those in the forward-looking statements. These factors include, without limitation, the following:

• the risk that adjustments to the company’s unaudited financial statements may be identified through the course of the company’s independent registered public accounting firm completing its integrated audit of the company’s financial statements and financial controls;

• the risk that additional information may arise during the company’s close process or as a result of subsequent events that would require the company to make adjustments to the financial information;

• the risk that changes in general economic conditions or consumer spending patterns will have a negative impact on the company’s financial performance or strategies;

• the highly competitive nature of the company’s business in the United States and internationally;

• the risk that the company or its franchisees will be unsuccessful in gauging fashion trends and changing consumer preferences;

• the risk that the company’s efforts to expand internationally may not be successful and could impair the value of its brands;

• the risk that trade matters, sourcing costs, events causing disruptions in product shipments from China and other foreign countries, or an inability to secure sufficient manufacturing capacity may disrupt the company’s supply chain or operations, or impact its financial results;

• the risk that the company’s franchisees will be unable to successfully open, operate, and grow the company’s franchised stores;

• the risk that the company or its franchisees will be unsuccessful in identifying, negotiating, and securing new store locations and renewing, modifying or terminating leases for existing store locations effectively;

• the risk that comparable sales and margins will experience fluctuations;

• the risk that the company will be unsuccessful in implementing its strategic, operating and people initiatives;

• the risk that changes in the company’s credit profile or deterioration in market conditions may limit its access to the capital markets and adversely impact its financial results and its ability to service its debt while maintaining other initiatives;

• the risk that updates or changes to the company’s information technology (“IT”) systems may disrupt its operations;

• the risk that acts or omissions by the company’s third-party vendors, including a failure to comply with the company’s code of vendor conduct, could have a negative impact on its reputation or operations;

• the risk that the company does not repurchase some or all of the shares it anticipates purchasing pursuant to its repurchase program;

• the risk that the adoption of new accounting pronouncements will impact future results;

• the risk that changes in the regulatory or administrative landscape could adversely affect the company’s financial condition, strategies, and results of operations; and

• the risk that the company will not be successful in defending various proceedings, lawsuits, disputes, claims, and audits.

Additional information regarding factors that could cause results to differ can be found in the company’s Annual Report on Form 10-K for the fiscal year ended January 29, 2011, as well as the company’s subsequent Quarterly Reports on Form 10-Q.

These forward-looking statements are based on information as of February 23, 2012. The company assumes no obligation to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.

About Gap Inc.

Gap Inc. is a leading global specialty retailer offering clothing, accessories, and personal care products for men, women, children, and babies under the Gap, Banana Republic, Old Navy, Piperlime, and Athleta brands. Fiscal 2011 net sales were $14.5 billion. Gap Inc. products are available for purchase in over 90 countries worldwide through about 3,000 company-operated stores, about 200 franchise stores, and e-commerce sites. For more information, please visitwww.gapinc.com.

Investor Relations Contact:

Mike Jenkins

(415) 427-4454

investor_relations@gap.com

Media Relations Contact:

Stacy Rollo

(415) 427-6230

press@gap.com

The Gap, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

UNAUDITED

($ in millions)	January 28, 2012		January 29, 2011
ASSETS
Current assets:
Cash and cash equivalents	$	1,885	$	1,561
Short-term investments		—		100
Merchandise inventory		1,615		1,620
Other current assets		809		645
Total current assets		4,309		3,926
Property and equipment, net		2,523		2,563
Other long-term assets		590		576
Total assets	$	7,422	$	7,065
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of debt	$	59	$	3
Accounts payable		1,066		1,049
Accrued expenses and other current liabilities		998		993
Income taxes payable		5		50
Total current liabilities		2,128		2,095
Long-term liabilities:
Long-term debt		1,606		—
Lease incentives and other long-term liabilities		933		890
Total long-term liabilities		2,539		890
Total stockholders’ equity		2,755		4,080
Total liabilities and stockholders’ equity	$	7,422	$	7,065

The Gap, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

UNAUDITED

	13 Weeks Ended					52 Weeks Ended
($ and shares in millions except per share amounts)	January 28, 2012		January 29, 2011			January 28, 2012		January 29, 2011
Net sales	$	4,283	$	4,364		$	14,549	$	14,664
Cost of goods sold and occupancy expenses		2,878		2,695			9,275		8,775
Gross profit		1,405		1,669			5,274		5,889
Operating expenses		1,033		1,076			3,836		3,921
Operating income		372		593			1,438		1,968
Interest, net		22		(4	)		69		(14	)
Income before income taxes		350		597			1,369		1,982
Income taxes		132		232			536		778
Net income	$	218	$	365		$	833	$	1,204
Weighted-average number of shares - basic		488		606			529		636
Weighted-average number of shares - diluted		492		612			533		641
Earnings per share - basic	$	0.45	$	0.60		$	1.57	$	1.89
Earnings per share - diluted	$	0.44	$	0.60		$	1.56	$	1.88

The Gap, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

	52 Weeks Ended
($ in millions)	January 28, 2012			January 29, 2011
Cash flows from operating activities:
Net income	$	833		$	1,204
Depreciation and amortization (a)		506			562
Change in merchandise inventory		4			(127	)
Other, net		20			105
Net cash provided by operating activities		1,363			1,744
Cash flows from investing activities:
Purchases of property and equipment		(548	)		(557	)
Purchases of short-term investments		(50	)		(475	)
Maturities of short-term investments		150			600
Change in other assets		(6	)		3
Net cash used for investing activities		(454	)		(429	)
Cash flows from financing activities:
Proceeds from issuance of long-term debt		1,646			—
Payments of long-term debt issuance costs		(11	)		—
Proceeds from issuance of short-term debt		16			6
Payments of short-term debt		—			(3	)
Proceeds from share-based compensation, net of withholding tax payments		62			70
Repurchases of common stock		(2,092	)		(1,959	)
Excess tax benefit from exercise of stock options and vesting of stock units		13			11
Cash dividends paid		(236	)		(252	)
Net cash used for financing activities		(602	)		(2,127	)
Effect of foreign exchange rate fluctuations on cash		17			25
Net increase (decrease) in cash and cash equivalents		324			(787	)
Cash and cash equivalents at beginning of period		1,561			2,348
Cash and cash equivalents at end of period	$	1,885		$	1,561

(a) Depreciation and amortization is net of amortization of lease incentives.

The Gap, Inc.

SEC REGULATION G

UNAUDITED

RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW

	52 Weeks Ended
($ in millions)	January 28, 2012			January 29, 2011
Net cash provided by operating activities	$	1,363		$	1,744
Less: purchases of property and equipment		(548	)		(557	)
Free cash flow (a)	$	815		$	1,187

(a) Free cash flow is a non-GAAP financial measure. We believe free cash flow is an important metric because it represents a measure of how much cash a company has available for discretionary and non-discretionary items after the deduction of capital expenditures, as we require regular capital expenditures to build and maintain stores and purchase new equipment to improve our business. We use this metric internally, as we believe our sustained ability to generate free cash flow is an important driver of value creation. However, this non-GAAP financial measure is not intended to supersede or replace our GAAP results.