Gap (GPS)

COMPARABLE STORE SALES FLAT

SAN FRANCISCO — July 7, 2005 — Gap Inc. (NYSE: GPS) today reported net sales of $1.52 billion for the five-week period ended July 2, 2005, which represents a 3 percent increase compared with net sales of $1.48 billion for the same period ended July 3, 2004. The company’s comparable store sales for June 2005 were flat compared with a 2 percent decrease in June 2004.

Comparable store sales by division for June 2005 were as follows:

“June was a transitional month as all of our brands worked to clear summer merchandise in preparation for new product flows which will arrive in July,” said Sabrina Simmons, Senior Vice President, Treasury and Investor Relations. “Merchandise margins for the month were slightly below June of last year.”

Year-to-date net sales of $6.3 billion for the 22 weeks ended July 2, 2005, decreased 1 percent compared with net sales of $6.4 billion for the same period ended July 3, 2004. The company’s year-to-date comparable store sales decreased 4 percent compared with a 5 percent increase in the prior year.

The company reiterated that it expects earnings per share of $1.44 to $1.48 for the full year 2005 and operating margins of about 13%. The company also reiterated that it expects inventory per square foot at the end of the second quarter to be down on a percentage basis in the low single digits.

As of July 2, 2005, Gap Inc. operated 3,024 store locations compared with 3,015 store locations last year.

For more detailed information, please call 800-GAP-NEWS to listen to Gap Inc.’s monthly sales recording. International callers may call 706-634-4421.