Gap Inc.

Gap Inc.
	Gap Inc. headquarters building
Company type	Public
Traded as	NYSE: GPS; S&P 500 Component;
Industry	Retail
Founded	August 21, 1969; 55 years ago; San Francisco, California, U.S.;
Founder	Donald Fisher; Doris F. Fisher;
Headquarters	San Francisco, California, U.S.
Number of locations	3,727 (Q1 2016); 2,406 (US, 2016);
Area served	Worldwide
Key people	Art Peck, Chief Executive Officer; Bob Fisher, Chairman;
Products	Clothing; accessories;
Revenue	US$ 16.148 billion (2014); US$ 15.651 billion (2013);
Operating income	US$ 2.149 billion (2014); US$ 1.942 billion (2013);
Net income	US$ 1.28 billion (2014); US$ 1.135 billion (2013);
Total assets	US$ 7.849 billion (2014); US$ 7.47 billion (2013);
Total equity	US$ 3.062 billion (2014); US$ 2.894 billion (2013);
Number of employees	137,000 (May 2014)
Subsidiaries	Banana Republic; Old Navy; Athleta; Intermix;
Website	www.gapinc.com/content/gapinc/html.html

The Gap, Inc.,^[6] commonly known as Gap Inc. or Gap, (stylized as GAP) is an American worldwide clothing and accessories retailer.

It was founded in 1969 by Donald Fisher and Doris F. Fisher and is headquartered in San Francisco, California. The company operates five primary divisions: the namesake banner, Banana Republic, Old Navy, Intermix, and Athleta. Gap Inc. is the largest specialty retailer in the United States, and is 3rd in total international locations, behind Inditex Group and H&M.^[7] As of September 2008, the company has approximately 135,000 employees and operates 3,727 stores worldwide, of which 2,406 are located in the U.S.^[8]

The Fisher family remains deeply involved in the company, collectively owning much of its stock.^[9] Donald Fisher served as Chairman of the Board until 2004, playing a role in the ouster of then-CEO Millard Drexler in 2002, and remained on the board until his death on September 27, 2009. Fisher's wife and their son, Robert J. Fisher, also serve on Gap's board of directors. Robert succeeded his father as chairman in 2004 and also served as CEO on an interim basis following the resignation of Paul Pressler in 2007, before being succeeded by Glenn K. Murphy up until 2014. On February 1, 2015, Art Peck took over as CEO.^[10]

History

Donald and Doris Fisher, who had a difficult time finding jeans that fit, opened the first Gap store on Ocean Avenue in San Francisco on August 21, 1969; its merchandise consisted of Levi's and LP records.^[11] They had raised US$63,000 to open the store,^[12] and reached US$2 million in sales in the second full year of operation. In 1970, Gap opened its second store in San Jose, California; its back room serves as the company's first replenishment warehouse. In 1971, Gap established its corporate headquarters in Burlingame, California with four employees. By 1973, the company had over 25 locations and had expanded into the East Coast market with a store in the Echelon Mall in Voorhees, New Jersey. In 1974, Gap began to sell private-label merchandise.

In the 1990s, Gap assumed an upscale identity and revamped its inventory under the direction of Millard Drexler.^[13] However, Drexler was removed from his position after 19 years of service in 2002 after over-expansion, a 29-month slump in sales, and tensions with the Fisher family. Drexler refused to sign a non-compete agreement and eventually became CEO of J. Crew. One month after his departure, merchandise that he had ordered was responsible for a strong rebound in sales.^[14]^[15]^[16] Robert J. Fisher recruited Paul Pressler as the new CEO; he was credited with closing under-performing locations and paying off debt. However, his focus groups failed to recover the company's leadership in its market.

In 2007, Gap announced that it would "focus [its] efforts on recruiting a chief executive officer who has deep retailing and merchandising experience ideally in apparel, understands the creative process and can effectively execute strategies in large, complex environments while maintaining strong financial discipline". That January, Pressler resigned after two disappointing holiday sales seasons and was succeeded by Robert J. Fisher on an interim basis.^[17]^[18]^[19] He began working with the company in 1980 and joined the board in 1990, and would later assume several senior executive positions, including president of Banana Republic and the Gap units.^[20] The board's search committee was led by Adrian Bellamy, chairman of The Body Shop International and included founder Donald Fisher. On February 2, Marka Hansen, the former head of the Banana Republic division, replaced Cynthia Harriss as the leader of the Gap division. The executive president for marketing and merchandising Jack Calhoun became interim president of Banana Republic.^[21] In May, Old Navy laid off approximately 300 managers in lower volume locations to help streamline costs. That July, Glenn Murphy, previously CEO of Shoppers Drug Mart in Canada, was announced as the new CEO of Gap, Inc. New lead designers were also brought on board to help define a fashionable image, including Patrick Robinson for Gap Adult, Simon Kneen for Banana Republic, and Todd Oldham for Old Navy. Robinson was hired as chief designer in 2007, but was dismissed in May 2011 after sales failed to increase. However, he enjoyed commercial success in international markets.^[22]^[23]^[24]

In October 2011, Gap Inc. announced plans to close 189 US stores, nearly 21 percent, by the end of 2013; however, it also plans to expand its presence in China.^[25]^[26] The company announced it would open its first stores in Brazil in the Fall of 2013.^[27]

In January 2015, Gap Inc announced plans to close their subsidiary Piperlime in order to focus on their core brands. The first and only Piperlime store, based in SoHo, New York City, closed in April.^[28]

Corporate identity

Logo

Gap Inc. owns a trademark to its name, "Gap". The Gap's original trademark was a service mark for retail clothing store services. The application was filed with the United States Patent and Trademark Office on February 29, 1972 by The Gap Stores; registration was granted on October 10, 1972. The first use of the trademark was on August 23, 1969, and expanded to commercial usage on October 17, 1969. A second application was filed by Gap Stores, Inc. on September 12, 1974, this time for a trademark filed for shirts. The first usage for shirts and clothing products was on June 25, 1974. Trademark registration was granted on December 28, 1976. Both the service mark and trademark are registered and owned by Gap (Apparel), LLC of San Francisco, California.

On October 6, 2010, in an effort to establish a contemporary presence, Gap introduced a new logo. It was designed with the Helvetica font and reduced the prominence of the brand's iconic blue box. After much public outcry, the company reverted to its previous "blue box" logo on October 12, after less than a week in use.^[29]^[30] Marka Hansen, the executive who oversaw the logo change, resigned February 1, 2011.^[31]

1969–1986
1986–present
October 4–11, 2010 (reverted back due to strong dislike)

Brands

Banana Republic, a small safari-themed clothing retailer, was purchased by Gap in 1983 and was rebranded as an upscale clothing retailer in the late 1980s. Old Navy was launched in 1994 as a value chain with a specialty flair. Forth & Towne, the company's fourth traditional retail concept, was launched on August 24, 2005, featuring apparel targeted toward women 35 years and older.^[32] On February 26, 2007, after an 18-month trial period, it was discontinued, and the 19 stores were closed.^[33] A fifth brand, the online clothing and accessories retailer Piperlime, was created in 2006; however, as of April 2015, the brand has been retired.^[34] A sixth brand, Athleta, a women's athletic wear line, was added in 2009.^[35] Intermix, a multi-brand fashion retailer founded in 1993, was acquired by Gap Inc. in 2012.^[36]

Gap's Sales by Division in Q1 2009^[37]

Divisions	Total revenue
Gap North America	$834 million
Banana Republic North America	$475 million
Old Navy North America	$1.18 billion
International	$369 million
Gap Inc Direct	$267 million

Marketing

The Gap originally targeted the younger generation when it opened, with its name referring to the generation gap of the time.^[38] It originally sold everything that Levi Strauss & Co made in every style, size, and color, and organized the stock by size. The Gap was the first of many shops that carried only Levi's, which led to a worldwide shortage of indigo denim.^{[citation needed]} The Gap eventually started making their own jeans and selling them at the expense of jeans from Levi's.^[39] Gap's current marketing works to appeal to a broad demographic of customers, whereas Banana Republic presents a sophisticated image and Old Navy focuses "fun, fashion, and value" for families and younger customers. While the company has been criticized for blandness and uniformity in its selling environments, it maintains that it tailors its stores "to appeal to unique markets" by developing multiple formats and designs.^[40] The domain www.gap.com attracts over 18 million visitors annually, according to a 2008 Compete.com survey.^[41] The brand is being criticized in the UK because the merchandise that is offered to the UK customers cost double the prices (or even a direct $/£ swap) found in the United States. Gap also does not offer XXL or larger sizes in the UK stating the UK market does not require them in contrast to market leader NEXT who offer a variety of larger sizes in the UK.

International presence

Gap operates company-owned stores in the United States, Canada, the United Kingdom, France, Italy, Indonesia, Japan, China, Hong Kong, Taiwan, and Mexico as of May 2016; it also has franchise agreements with unaffiliated franchisees to operate Gap, Banana Republic, or Old Navy stores in 43 countries.^[42] As of May 2016, Gap Inc. operates 3,727 company-owned and franchise locations.^[43] In January 2008, Gap signed a deal with Marinopoulos Group to open Gap and Banana Republic stores in Greece, Romania, Bulgaria, Cyprus, and Croatia.^[44] In February 2009, Elbit Imaging, Ltd. secured a franchise to open and operate Gap and Banana Republic stores in Israel.^[45] In August 2010, the company opened its first store in Melbourne, Australia at Chadstone Shopping Centre.^{[citation needed]} In September 2011, Komax opened the first Gap store in Chile, due to a franchise.^[46] In October 2011, the first GAP store opened in Warsaw, Poland,^[47] but shut it down and two other locations in Wrocław and Katowice in 2015. Gap now has a store in New Delhi, India which opened in May 2015. On 20 February 2016, Gap launched stores in Mumbai at Oberoi Mall and Infinity-2.

In May 2016, Gap Inc. announced it would shutter all Old Navy stores in Japan in response to poor Q1 performance for Old Navy and consistent losses across the organization.^[48]

Product Red

In 2006, Gap took part in the Product Red campaign with the launch of a special RED collection, including a T-shirt manufactured in Lesotho from African cotton. The expanded Gap Product Red collection was released on October 13, 2006. 50 to 100 percent of the profits went to the Global Fund, depending on the item.^[49] The company continued the products into 2007, especially in the lead up to Valentine's Day, using slogans such as "Admi(RED)" and "Desi(RED)." National Labor Committee for Worker and Human Rights activists criticized Gap's partnerships because Gap has historically been accused of sweatshop-like conditions.^[50] Product Red has contributed over $45 million to the Global Fund, more than any other private donation received to date. Other launch partners included American Express, Apple Inc., Converse, Hallmark, Emporio Armani, and Motorola.

Labour controversies

In 2003, a class action lawsuit against Gap and 21 other companies alleged that sweatshop workers in Saipan were not paid for overtime work, were subjected to forced abortion, and were required to work in unsafe working conditions.^[51] A settlement of 20 million dollars was reached whereby The Gap did not admit liability.^[52]

In 2007, Ethisphere Magazine chose Gap from among thousands of companies evaluated as one of 100 "World’s Most Ethical Companies."^[53] In May 2006, adult and child employees of Western, a supplier in Jordan, were found to have worked up to 109 hours per week and to have gone six months without being paid. Some employees claimed they had been raped by managers.^[54] Most of these allegations were directed at Wal-Mart (who mostly ignored the claims), while Gap immediately looked into the matter to remedy the situation.^[54]^{[failed verification]}

On October 28, 2007, BBC footage showed child labor in Indian Gap factories.^[55] The company denied knowledge of the happenings; it subsequently removed and destroyed the single piece of clothing in question, a smock blouse, from a British store. Gap promised to investigate breaches in its ethical policy.^[56]

Bangladeshi and international labor groups in 2011 put forth a detailed safety proposal which entailed the establishment of independent inspections of garment factories. The plan called for inspectors to have the power to close unsafe factories. The proposal entailed a legally binding contract between suppliers, customers and unions. At a meeting in 2011 in Dhaka, major European and North American retailers, including Gap, rejected the proposal. Further efforts by unions to advance the proposal after numerous and deadly factory fires have been rejected.^[57] After the 2013 Savar building collapse, Kohl's became a founding member of the Alliance for Bangladesh Worker Safety.

On February 19, 2014, Glenn Murphy, CEO of Gap Inc., announced Gap will raise the minimum wages for its 65,000 U.S. store employees.^[58]

Management

Leadership

The current leadership is:^[59]

Art Peck, Chief Executive Officer^[60]
Sabrina Simmons, EVP and Chief Financial Officer
Jeff Kirwan, Global President, Gap
Andi Owen, Global President, Banana Republic
Sonia Syngal, Global President, Old Navy
Nancy Green, President and General Manager, Athleta
Jyothi Rao, President and General Manager, Intermix
Abinta Malik, EVP and General Manager, Greater China
Michelle Banks, EVP, General Counsel, Corporate Secretary, Chief Compliance Officer, Gap Inc.
Michael Yee, EVP, Global Supply Chain Logistics and Product Operations, Gap Inc.
Shawn Curran, EVP, Global Supply Chain, Sourcing and Production, Gap Inc.
Bobbi Silten, President, EVP, Global Talent & Responsibility, Gap Inc.
Paul Chapman, EVP and Chief Information Officer, Gap Inc.
Sol Goldfarb, EVP, Digital & Customer Experience, Gap Inc.

Board of directors^[61]

Domenico De Sole
Doris F. Fisher (1969)
Robert J. Fisher (1990), Chairman (2004), Chairman (2015)
William S. Fisher
Tracy Gardner (effective November 11, 2015)^[62]
Bella Goren
Bob L. Martin
Jorge P. Montoya
Art Peck
Mayo A. Shattuck III
Katherine Tsang
Padmasree Warrior^[63]

Stores

As of the end of Q1 2016, Gap Inc. had 3,727 company-operated or franchised stores in operation across 52 countries and had the ability to ship to 214 countries.^[12]^[64] Stores in Brazil, Canada, China, France, Italy, Ireland, Japan, UK, and US (including Puerto Rico) are company-owned; those outside of these countries are owned and operated by franchises.