Gap Inc Financial Reports- 2011

Sharing American style around the world.

2010 Annual Report

Dear Shareholders, In 2010, Gap Inc. took a big step onto the global retailing stage. With significant advancements in our online and franchise businesses, as well as entry into two more of the world’s top 10 retail markets, 2010 will stand out as the year we positioned the company to compete and win globally. We continued to expand share of sales generated from our International and online businesses. In 2006, 14 percent of our sales came from online and International. Now, we are on track to nearly double that percentage within three years. I’m proud we were able to execute on the next phase of our strategy while continuing to deliver attractive financial results for our investors. We achieved double-digit earnings per share growth for the fourth consecutive year, and we’re well-positioned to deliver further shareholder value in the years ahead. The hard work of many people across Gap Inc. made these accomplishments possible. For that reason, on the following pages, I’ve asked a few of our leaders to help answer some questions that have come up in our conversations with shareholders. We have a compelling company strategy, and now it’s up to us to execute and deliver for our shareholders, employees and customers.

Glenn K. Murphy Chairman of the Board and Chief Executive Officer

How should we think about Gap Inc.’s global opportunity?

Glenn: In 2006, we operated in eight countries and only sold products online in the United States. Now, we’re in 31 countries with online sales available to customers in over 90 countries. Managed by local teams in London, Tokyo and Shanghai, we have the infrastructure to increase our share of the $1.4 trillion global retail market. Customers increasingly demand access to our brands through a variety of channels. In response, we’ve aggressively added Outlet stores to existing markets and opened in new markets with huge potential. We also worked with our...