Gap (GPS)

GROWTH OPPORTUNITIES IN ONLINE AND INTERNATIONAL CATEGORIES

SAN FRANCISCO – October 16, 2008 – Gap Inc. (NYSE: GPS) today presented investors with an update on the company’s strategies for improving business at its core brands, along with an overview of growth initiatives across its online and international businesses.

“With Gap Inc.’s strong balance sheet, we’re in a solid position to succeed in the long term and we have the flexibility to respond as necessary to the current economic environment,” said Glenn Murphy, Chairman and CEO of Gap Inc. “We remain focused on improving results at our core brands, while pursuing strategic growth opportunities online and internationally.”

Sabrina Simmons, the company’s chief financial officer, said: “Our focus on disciplined inventory and cost management has enabled us to achieve a 65 percent growth in earnings per share in the first half of 2008. We’re reaffirming our financial guidance for the year as we closely monitor the extreme market volatility.”

The company reiterated that it expects fiscal year 2008 diluted earnings per share on a GAAP basis to be $1.30 to $1.35. Gap Inc. also reiterated that it will deliver operating margins of about 10 percent and expects to generate about $1 billion in free cash flow for 2008. Gap Inc. releases its third quarter earnings on November 20, 2008.

In addition to Murphy and Simmons, speakers at today’s annual investor meeting included the presidents of Gap, Banana Republic and Old Navy; and leaders of its online and franchise businesses. Highlights of these business updates follow: