Gap (GPS)

Second Quarter Earnings Guidance

For the second quarter of fiscal year 2007, the company expects diluted earnings per share on a GAAP basis to be $0.17 to $0.18. This includes a benefit of about $0.01 per share from tax rate adjustments impacting the second quarter; a loss of $0.01 per share related to the discontinued operation of Forth & Towne and $0.01 per share of expenses associated with the company’s ongoing cost reduction initiatives. Excluding the loss associated with the discontinued operation of Forth & Towne and the expenses associated with the cost reduction initiatives, the company expects diluted earnings per share for the second quarter of fiscal year 2007 to be $0.19 to $0.20. Please see the reconciliation of expected diluted earnings per share on a GAAP basis to expected diluted earnings per share excluding the above amounts, a non-GAAP financial measure, in the table at the end of this release.

The company reiterated that it expects the year-over-year percent change in inventory per square foot to be down in the low-single digits at the end of the second quarter.

For more detailed information, please call 1-800-GAP-NEWS to listen to Gap Inc.’s monthly sales recording. International callers may call 706-634-4421.

Gap Inc. will release its second quarter earnings via press release on August 23, 2007, at 1:30 p.m. Pacific Time. In addition, the company will host a summary of Gap Inc.’s second quarter results in a live conference call and webcast at approximately 2:00 p.m. Pacific Time. The conference call can be accessed by calling 800-374-0168 and international callers may dial 706-634-0994. The webcast can be accessed at www.gapinc.com.

Gap Inc. will announce August sales on September 6, 2007.