GAP INC (GAP) Business

Item 1. Business.

General

The Gap, Inc. (Gap Inc., the "Company," "we," and "our") is a house of iconic American brands offering apparel, accessories, and personal care products for men, women, and children under the Old Navy, Gap, Banana Republic, and Athleta brands.

Gap Inc. is an omni-channel retailer, with sales to customers both in stores and online, through Company-operated and franchise stores, websites, and third-party arrangements. As of January 31, 2026, we had Company-operated stores in the United States, Canada, Japan, and Taiwan. We also have franchise agreements to operate Old Navy, Gap, Banana Republic, and Athleta throughout Asia, Europe, Latin America, the Middle East, and Africa. Under these agreements, third parties operate, or will operate, stores and websites that sell apparel and related products under our brand names. We also have licensing agreements with licensees to sell products using our brand names.

In addition to operating in the specialty, outlet, online, and franchise channels, we use our omni-channel capabilities to bridge the digital world and physical stores. The shopping experience is further enhanced by our omni-channel services, including buy online pick-up in store, order-in-store, and ship-from-store, as well as enhanced mobile-enabled experiences, which allow our customers to shop seamlessly across our brands and channels. Our brands have shared investments in supply chain and information technology, which allows us to optimize efficiency and responsiveness in our operations.

Old Navy.  Old Navy is a North American value apparel brand that makes on-trend fashion accessible to everyone. The brand offers playful style with a combination of on-trend product, consistent quality, and great value. Old Navy opened its first store in 1994 in Colma, California and since then has expanded to more than 1,200 Company-operated stores including outlet locations, online, and additional franchise retail locations around the world.

Gap.  Gap is a globally recognized icon of casual American style. Founded in San Francisco in 1969, Gap champions originality by creating loved essentials and delivering culturally-relevant experiences that celebrate individuality. Gap is an apparel and accessories brand that also offers GapKids, babyGap, Gap Maternity, GapBody, and GapFit collections, as well as limited-edition collections with GapStudio and with partner brands. The brand also serves value-conscious customers with exclusively designed collections for Gap Outlet and Gap Factory Stores. Gap is our namesake brand and connects with customers online and in Company-operated stores, as well as franchise retail locations globally.

Banana Republic.  Banana Republic is a storyteller's brand, outfitting the modern explorer with high-quality, expertly crafted collections and experiences to inspire and enrich their journeys. Founded in 1978 and acquired by Gap Inc. in 1983, the brand connects with customers online and in Company-operated Banana Republic and Banana Republic Factory stores, as well as franchise retail locations globally.

Athleta.  Athleta is a premium performance lifestyle brand with a mission to inspire women and girls to build confidence, strength, and belonging through movement – igniting the Power of She. Founded in 1998 and acquired by Gap Inc. in 2008, Athleta is certified as a benefit corporation ("B Corp") that bridges product innovation with style for women and girls. Athleta products are available at Company-operated stores across the U.S. and Canada, franchise retail locations globally, and online.

We ended fiscal 2025 with 2,474 Company-operated stores and approximately 1,000 franchise store locations. For more information on the number of stores by brand and region, see the table included in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, of this Form 10-K.

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Old Navy, Gap, Banana Republic, and Athleta each have a private label credit card program and a co-branded credit card program through which customers receive benefits. Private label and co-branded credit cards are provided by a third-party financing company, with associated revenue sharing arrangements reflected in Gap Inc. operations. In the first quarter of fiscal 2026, we rebranded our integrated loyalty program across the U.S. as Encore, which is designed to deepen customer engagement with our brands. We are focused on increasing the lifetime value of our loyalty members through greater personalization, including leveraging first-party data to deliver targeted content, offers, and experiences. Although each brand expression has a different look and feel, customers can earn and redeem rewards across all of our brands. All of our brands also issue and redeem gift cards.

Product Development

We design, develop, market, and sell a wide range of apparel, accessories, and personal care products reflecting a mix of basics and fashion items based on widely accepted fashion trends, striving to bring product to market quickly and provide unrivaled value to customers. We are committed to pursuing technology and product innovation that supports our sustainability efforts while also delivering great quality products to our customers. We are evolving our product-to-market capabilities through greater digital enablement and the use of customer and market insights to enhance product relevance and speed to market. Our product teams research, test, and iterate each season to deliver the latest styles in fabrics and silhouettes that are made to last while remaining conscious of the types of materials being sourced and the suppliers they work with. We also leverage feedback and purchasing data from our customer database to guide our product and merchandising decision making. For additional information on risks related to product development, see the section entitled “Risk Factors—Risks Related to Competition, Brand Relevance, and Brand Execution—We must successfully gauge apparel trends and changing consumer preferences to succeed” in Item 1A, Risk Factors, of this Form 10-K.

Marketing and Advertising

We use a variety of marketing and advertising mediums to drive brand health, customer acquisition, and engagement. We leverage our customer database and respond to shopping behaviors and needs with personalized content across email, site, and digital media to drive relevance and urgency. Our diversified media mix spans traditional to digital to social media. We support our marketing efforts through partnerships to build engagement and relevance. We focus on productivity of demand generation investments to drive increased effectiveness. For additional information on risks related to our marketing efforts, see the section entitled “Risk Factors—Risks Related to Competition, Brand Relevance, and Brand Execution—We must successfully implement our marketing efforts” in Item 1A, Risk Factors, of this Form 10-K.

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Merchandise Vendors

We purchase private label and non-private label merchandise from approximately 200 vendors. Our vendors have factories in about 30 countries. Our two largest vendors accounted for approximately 9 percent and 8 percent of the dollar amount of our total fiscal 2025 purchases. Substantially all of our merchandise purchases during fiscal 2025, by dollar value, were from factories outside North America. Approximately 27 percent of our fiscal 2025 purchases, by dollar value, were from factories in Vietnam. Approximately 21 percent of our fiscal 2025 purchases, by dollar value, were from factories in Indonesia. Product cost increases or events causing disruption of imports from Vietnam, Indonesia, or other foreign countries, including the imposition of additional import restrictions, tariffs, or taxes, or vendors temporarily closing or potentially failing due to political, financial, or regulatory issues, could have an adverse effect on our operations. For example, higher tariff rates imposed by the United States increased cost of goods sold during fiscal 2025. Substantially all of our foreign purchases of merchandise are negotiated and paid for in U.S. dollars. For additional information on risks related to our merchandise vendors, see the below sections in Item 1A, Risk Factors, of this Form 10-K.

•“Risks Related to Macroeconomic Conditions—Trade matters, including the imposition of tariffs by the United States, have had, and could continue to have, an adverse effect on our business,”

•"Risks Related to Our Business and Operations—Our business is subject to risks associated with global sourcing and manufacturing,"

•“Risks Related to Our Business and Operations—Our business could be adversely affected by natural disasters, public health crises, political crises, negative global climate patterns, or other catastrophic events,”

•"Financial Risks—Our business is exposed to the risks of foreign currency exchange rate fluctuations and our hedging strategies may not be effective in mitigating those risks," and

•"Legal, Regulatory, and Compliance Risks—Our vendors' failure to adhere to our Code of Vendor Conduct could harm our business."

Seasonal Business and other Macroeconomic Conditions

Our business typically follows a seasonal pattern, with sales peaking during the end-of-year holiday period. Additionally, other macroeconomic conditions such as uncertainty surrounding global geopolitical instability, inflationary pressures, foreign currency fluctuations, and changes in interest rates, duties, tariffs, tax laws, and other restrictions as a result of government fiscal, monetary, trade, and tax policies, have had and may continue to have an impact on customer behavior that could result in temporary changes in the seasonality of our business. For additional information on risks related to macroeconomic conditions, see the section entitled “Risk Factors—Risks Related to Macroeconomic Conditions—Our business is impacted by global economic conditions and the related impact on consumer spending” in Item 1A, Risk Factors, of this Form 10-K.

Brand Building

Our ability to develop and evolve our existing brands is a key to our success. We believe our distinct brands are among our most important assets. Virtually all aspects of brand development, from product design and distribution to marketing, merchandising, and shopping environments, are controlled by Gap Inc. employees. We continue to invest in our business and enhance the customer experience through ongoing supply chain, digital, marketing, and omni-channel initiatives, which include artificial intelligence ("AI") tools designed to create a seamless and personalized environment and our fashion and entertainment platform focused on enhancing brand engagement. For additional information on risks related to building our brands, see the section entitled “Risk Factors—Risks Related to Strategic Initiatives and Investments—Our investments in customer, digital, AI, omni-channel, and other strategic initiatives may not deliver the results we anticipate” in Item 1A, Risk Factors, of this Form 10-K.

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Trademarks and Service Marks

We own the material trademarks used in connection with the marketing, distribution, and sale of our products, domestically and internationally, where our products are currently sold or manufactured. Our major trademarks include the Old Navy, Gap, Banana Republic, and Athleta trademarks and service marks, and certain other trademarks and service marks. We have obtained and continue to maintain registrations for these marks in the United States, Canada, Mexico, the United Kingdom, the European Union, Japan, China, and numerous other countries throughout the world. In addition, we own domain names for our primary trademarks and numerous copyright registrations. We intend to continue to strategically register, both domestically and internationally, trademarks, domain names, and copyrights that we utilize today and those we may develop in the future. We will continue to aggressively police our intellectual property and pursue those who infringe our intellectual property rights, both domestically and internationally. We believe the distinctive trademarks we use in connection with our products are important in building our brand image and distinguishing our products from those of others.

Franchise and Licensing

We have franchise agreements to operate Old Navy, Gap, Banana Republic, and Athleta in about 35 countries around the world. Under these agreements, third parties operate, or will operate, stores and websites that sell apparel and related products under our brand names. We also have licensing agreements with licensees to sell products using our brand names. For additional information on risks related to our franchise and licensing business, see the below sections in Item 1A, Risk Factors, of this Form 10-K.

•“Risks Related to Strategic Initiatives and Investments—Our franchise and licensing businesses are subject to certain risks not directly within our control,” and

•“Risks Related to Strategic Initiatives and Investments—Our efforts to expand internationally may not be successful.”

Inventory

The nature of the retail business requires us to carry a significant amount of inventory, especially prior to the peak holiday selling season when we, along with other retailers, generally build up inventory levels. We maintain a large part of our inventory in distribution centers. We review our inventory levels in order to identify slow-moving merchandise and broken assortments (items no longer in stock in a sufficient range of sizes or colors) and we primarily use markdowns to clear merchandise. For additional information on risks related to our inventory, see the below sections in Item 1A, Risk Factors, of this Form 10-K.

•“Risks Related to Competition, Brand Relevance, and Brand Execution—We must successfully gauge apparel trends and changing consumer preferences to succeed,"

•"Risks Related to Our Business and Operations—We must effectively manage our inventory and fulfillment operations,"

•"Risks Related to Our Business and Operations—We must protect our inventory from loss and theft," and

•"Risks Related to Our Business and Operations—Our business could be adversely affected by natural disasters, public health crises, political crises, negative global climate patterns, or other catastrophic events"

Competitors

The global apparel retail industry is highly competitive. We compete with local, national, and global apparel retailers. For additional information on risks related to competition, see the section entitled “Risk Factors—“Risks Related to Competition, Brand Relevance, and Brand Execution—Our business is highly competitive” in Item 1A, Risk Factors, of this Form 10-K.

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Human Capital

As of January 31, 2026, we had a global workforce of approximately 79,000 employees. We also hire seasonal employees, primarily during the peak holiday selling season. As of January 31, 2026, approximately 84 percent of employees worked in retail locations, approximately 8 percent of employees worked in distribution centers, and approximately 8 percent of employees worked in headquarters locations. In addition, as of that date, approximately 82 percent of employees were located in the U.S. and approximately 18 percent of employees were located outside of the U.S., with a majority of those non-U.S. based employees located in Canada and Japan.

The talent and capabilities of our people are essential to our business strategy and execution. As such, we have implemented strategies to attract, develop, and retain skilled employees in our design, merchandising, supply chain, marketing, technology, and other functions, as well as in our stores and distribution centers. These strategies are designed to develop our talent; create a culture of inclusion and belonging for our employees; ensure fair and competitive pay; engage and solicit feedback from employees; and support employee health, well-being, and safety.

Talent Development. We provide resources, experiences, and support to expand our employees’ skills and shape their careers. Our Let's Grow career development framework is designed to fuel career growth and empower our employees to thrive. This framework is built around three key pillars - Let's Grow Ourselves, Let's Grow Our Teams, and Let's Grow Each Other - which are focused on developing great employees, managers, and mentors. Each pillar has a set of curated self-learning courses that employees are invited to leverage. Throughout the year, we host Career Spotlights to celebrate our leaders' career journeys and provide insights, inspiration, and practical advice to our employees. All full-time U.S. and Canadian employees who have completed one year of employment also qualify for an annual tuition reimbursement benefit.

Inclusion and Belonging. We believe it is important to foster a workplace where our employees feel valued, respected, and equipped to reach their full potential; have a strong sense of belonging and connection to our company; and are able to bring their authentic selves to work. As such, we aim to promote a culture of inclusion and belonging for our employees and develop leaders who can express, model, and promote inclusive behaviors. We also offer opportunities for our employees to celebrate culture throughout the year through heritage month events and our Employee Resource Groups.

Pay Equity. We are committed to ensuring pay equity within our company. We continue to conduct annual internal pay equity reviews to help ensure that our pay practices are fair and competitive.

Engagement and Feedback. We engage regularly with employees through various means including internal communications and education about business initiatives, along with regular town hall meetings with management across our business and brands. We value receiving feedback and use opinion surveys to understand what is important to our employees. Survey results are evaluated and shared with employees and used to inform ongoing programs and strategies, identify opportunities to enhance the employee experience, and guide management focus and attention.

Health, Well-being, and Safety. We prioritize our employees' health, well-being, and safety and provide an array of benefits to help our employees be at their best to optimize their professional and personal lives. We offer a comprehensive and competitive benefits package for our full-time non-seasonal employees which are tailored to the geographies where we operate. Part-time and seasonal employees have access to many of the same resources. Our store and distribution center employees are trained on safe work practices and learn procedural knowledge through on-the-job training programs that are aligned to industry and occupational health and safety standards. Dedicated teams analyze risks and collaborate with operational leaders to understand and adjust business practices to align with emerging trends. Annually, our Internal Audit team gauges procedural compliance at our stores and distribution centers.

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Human Capital Management Oversight. Our Board of Directors (the "Board") through its Compensation and Management Development Committee oversees human capital management issues. The Compensation and Management Development Committee has formal oversight over the Company's policies and strategies relating to its human capital management function, including policies, processes, and strategies relating to employee recruitment, retention, appraisal, and development; talent management; workplace culture and employee engagement; workforce inclusion and belonging, and any risks or goals related thereto; and the Company's general approach to broad-based compensation, benefits, workplace, and employment practices, as outlined in its charter. The Compensation and Management Development Committee receives reports on talent management, succession planning, and inclusion and belonging, and periodically engages on compensation program design for employees at all levels.

For additional information on risks related to our human capital management, see the section entitled “Risk Factors—Risks Related to Our Business and Operations—We must effectively manage key executive succession and retention and continue to attract qualified personnel” in Item 1A, Risk Factors, of this Form 10-K.

Government Regulation

As a company with global operations, we are subject to the laws of the United States and the multiple foreign jurisdictions in which we operate and the rules, reporting obligations, and regulations of various governing bodies, which may differ among jurisdictions. Compliance with these laws, rules, reporting obligations, and regulations, which can change, could result in significant costs but has not had, and is not expected to have, a material effect on our capital expenditures, results of operations, or competitive position as compared to prior periods. For additional information on risks related to regulation, see the section entitled “Risk Factors—Legal, Regulatory, and Compliance Risks—We must comply with applicable laws and regulations and manage changes in the regulatory and administrative landscape” in Item 1A, Risk Factors, of this Form 10-K.

Available Information

We make available on our website (www.gapinc.com) under “Investors, Financial Information, SEC Filings” our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports as soon as reasonably practicable after we electronically file or furnish them to the SEC.

Committee charters for each standing committee of our Board (the Audit and Finance, Compensation and Management Development, and Governance and Sustainability Committees) and Corporate Governance Guidelines are available on our website under “Investors, Governance.” Our Code of Business Conduct is available on our website under “Investors, Corporate Compliance.” Any waivers to the Code of Business Conduct will be publicly disclosed on the website.

Sustainability

Information about our sustainability efforts is available on our website (www.gapinc.com) under "Impact, ESG Resources" which provides information on our public commitments, policies, social and environmental programs, sustainability strategy, and sustainability data. Our annual Impact Report is also available on our website.

For additional information on risks related to our sustainability efforts, see the section entitled “Risks Related to Sustainability and Climate Change” in Item 1A, Risk Factors, of this Form 10-K.

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Information about our Executive Officers

The following are our executive officers:

Name, Age, Position, and Principal Occupation:

Horacio Barbeito, 55, President and Chief Executive Officer, Old Navy effective August 2022; President and CEO, Walmart Canada from November 2019 to July 2022; President and CEO, Walmart Argentina and Chile from February 2015 to November 2019; and President and CEO, Walmart Argentina from February 2012 to February 2015.

Mark Breitbard, 58, President and Chief Executive Officer, Gap brand effective September 2020; President and Chief Executive Officer, Specialty Brands from March 2020 to September 2020; President and Chief Executive Officer, Banana Republic from May 2017 to March 2020; Chief Executive Officer, The Gymboree Corporation from January 2013 to April 2017; President, Gap North America from 2012 to January 2013; Executive Vice President, Gap North America Merchandising from 2011 to 2012; and Executive Vice President, GapKids and babyGap from 2010 to 2011.

Eric Chan, 49, Executive Vice President, Chief Business and Strategy Officer effective January 2024; Chief Financial Officer, LA Clippers from August 2018 to December 2023; Chief Operating Officer, Bouqs Company from February 2017 to August 2018; and Chief Financial Officer, Loot Crate from October 2015 to February 2017.

Richard Dickson, 57, President and Chief Executive Officer, Gap Inc. effective August 2023; President and Chief Operating Officer, Mattel, Inc. from 2015 to 2023; Chief Brands Officer, Mattel, Inc. from 2014 to 2015; and President and Chief Executive Officer, Branded Businesses of The Jones Group (now Premier Brands Group Holdings), which owned a portfolio of premier apparel, footwear, and accessories brands, from 2010 to 2014.

Sally Gilligan, 53, Executive Vice President, Chief Supply Chain and Transformation Officer effective January 2024; Chief Supply Chain, Strategy and Transformation Officer from March 2023 to January 2024; Chief Growth Transformation Officer from April 2021 to March 2023; Chief Information Officer & Head of Strategy from April 2018 to March 2021; and Senior Vice President, Product Operations and Supply Chain from 2015 to April 2018.

Julie Gruber, 60, Executive Vice President, Chief Legal and Compliance Officer, and Corporate Secretary effective May 2021; Executive Vice President, Chief Legal, Compliance and Sustainability Officer, and Corporate Secretary from March 2020 to May 2021; and Executive Vice President, Global General Counsel, Corporate Secretary, and Chief Compliance Officer from February 2016 to March 2020. Ms. Gruber previously held various senior roles within the Company's Legal department.

Katrina O'Connell, 56, Executive Vice President, Chief Financial Officer effective March 2020; Chief Financial Officer and Senior Vice President of Strategy & Innovation, Old Navy from January 2017 to March 2020; and Chief Financial Officer and Senior Vice President of Strategy, Banana Republic from March 2015 to January 2017. Ms. O'Connell previously held various roles at the Company focused on both financial budgeting and forecasting for the Company's portfolio of brands, as well as roles in Supply Chain, IT, Treasury and Investor Relations.

Amy Thompson, 50, Executive Vice President, Chief People Officer effective January 2024; Chief People Officer, Mattel, Inc. from 2017 to 2023; and Chief People Officer, TOMS Shoes from 2012 to 2017. Ms. Thompson previously held several executive and leadership roles at Starbucks Corporation from 2006 to 2012.