Segment Information

9 Months Ended

Oct. 27, 2012

Segment Reporting [Abstract]

Segment Information

Segment Information

We identify our operating segments according to how our business activities are managed and evaluated. All of our operating segments sell a group of similar products – apparel, accessories, and personal care products. We have two reportable segments:

• Stores – The Stores reportable segment includes the results of the retail stores for Gap, Old Navy, and Banana Republic. We have aggregated the results of all Stores operating segments into one reportable segment because the operating segments have similar economic characteristics.

• Direct – The Direct reportable segment includes the results for our online brands, including Piperlime and Athleta.

Net sales by brand, region, and reportable segment are as follows:

($ in millions)	Gap			Old Navy			Banana Republic			Franchise (3)			Piperlime and Athleta			Total (4)			Percentage of Net Sales
13 Weeks Ended October 27, 2012
U.S. (1)	$	838		$	1,194		$	515		$	—		$	—		$	2,547		66	%
Canada	93			107			55			—			—			255			7
Europe	165			—			15			15			—			195			5
Asia	245			3			35			23			—			306			8
Other regions	—			—			—			52			—			52			1
Total Stores reportable segment	1,341			1,304			620			90			—			3,355			87
Direct reportable segment (2)	146			210			64			—			89			509			13
Total	$	1,487		$	1,514		$	684		$	90		$	89		$	3,864		100	%
Sales growth	5		%	9		%	8		%	11		%	31		%	8		%
($ in millions)	Gap			Old Navy			Banana Republic			Franchise (3)			Piperlime and Athleta			Total (4)			Percentage of Net Sales
13 Weeks Ended October 29, 2011
U.S. (1)	$	819		$	1,105		$	495		$	—		$	—		$	2,419		67	%
Canada	89			100			48			—			—			237			7
Europe	171			—			13			22			—			206			6
Asia	219			—			31			21			—			271			7
Other regions	—			—			—			38			—			38			1
Total Stores reportable segment	1,298			1,205			587			81			—			3,171			88
Direct reportable segment (2)	121			178			47			—			68			414			12
Total	$	1,419		$	1,383		$	634		$	81		$	68		$	3,585		100	%
Sales growth (decline)	(3		)%	(5		)%	2		%	47		%	21		%	(2		)%
($ in millions)	Gap			Old Navy			Banana Republic			Franchise (3)			Piperlime and Athleta			Total (4)			Percentage of Net Sales
39 Weeks Ended October 27, 2012
U.S. (1)	$	2,351		$	3,486		$	1,516		$	—		$	—		$	7,353		68	%
Canada	244			285			147			—			—			676			6
Europe	474			—			47			48			—			569			5
Asia	716			5			104			63			—			888			8
Other regions	—			—			—			137			—			137			1
Total Stores reportable segment	3,785			3,776			1,814			248			—			9,623			88
Direct reportable segment (2)	352			511			162			—			278			1,303			12
Total	$	4,137		$	4,287		$	1,976		$	248		$	278		$	10,926		100	%
Sales growth	4		%	6		%	8		%	21		%	31		%	6		%
($ in millions)	Gap			Old Navy			Banana Republic			Franchise (3)			Piperlime and Athleta			Total (4)			Percentage of Net Sales
39 Weeks Ended October 29, 2011
U.S. (1)	$	2,296		$	3,335		$	1,444		$	—		$	—		$	7,075		69	%
Canada	235			283			134			—			—			652			6
Europe	501			—			37			53			—			591			6
Asia	635			—			90			56			—			781			8
Other regions	—			—			—			96			—			96			1
Total Stores reportable segment	3,667			3,618			1,705			205			—			9,195			90
Direct reportable segment (2)	294			440			125			—			212			1,071			10
Total	$	3,961		$	4,058		$	1,830		$	205		$	212		$	10,266		100	%
Sales growth (decline)	(1		)%	(3		)%	1		%	47		%	20		%	—		%

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(1) U.S. includes the United States and Puerto Rico.

(2) Online sales shipped from distribution centers located outside the U.S. were $44 million ($33 million for Canada and $11 million for Europe) and $34 million ($24 million for Canada and $10 million for Europe) for the thirteen weeks endedOctober 27, 2012 and October 29, 2011, respectively. Online sales shipped from distribution centers located outside the U.S. were $108 million ($76 million for Canada and $32 million for Europe) and $84 million ($58 million for Canada and $26 million for Europe) for the thirty-nine weeks endedOctober 27, 2012 and October 29, 2011, respectively.

(3) Franchise sales were $90 million ($78 million for Gap and $12 million for Banana Republic) and $81 million ($71 million for Gap and $10 million for Banana Republic) for the thirteen weeks endedOctober 27, 2012 and October 29, 2011, respectively. Franchise sales were $248 million ($217 million for Gap and $31 million for Banana Republic) and $205 million ($179 million for Gap and $26 million for Banana Republic) for the thirty-nine weeks endedOctober 27, 2012 and October 29, 2011, respectively.

(4) Net sales outside of the U.S. and Canada (including Direct and franchise) were $564 million and $525 million for the thirteen weeks endedOctober 27, 2012 and October 29, 2011, respectively. Net sales outside of the U.S. and Canada (including Direct and franchise) were $1.6 billion and $1.5 billion for the thirty-nine weeks endedOctober 27, 2012 and October 29, 2011, respectively.

Gap and Banana Republic outlet retail sales are reflected within the respective results of each brand.

Financial Information for Reportable Segments

Operating income is a primary measure of profit we use to make decisions on allocating resources to our operating segments and to assess the operating performance of each operating segment. It is defined as income before interest expense, interest income, and income taxes. Corporate expenses are allocated to each operating segment and recorded in operating income on a rational and systematic basis.

Reportable segment assets presented below include those assets that are directly used in, or allocable to, that segment’s operations. Total assets for the Stores reportable segment primarily consist of merchandise inventory, the net book value of store assets, and prepaid expenses and receivables related to store operations. Total assets for the Direct reportable segment primarily consist of merchandise inventory, the net book value of information technology and distribution center assets, and the net book value of goodwill and trade name as a result of the acquisition of Athleta. We do not allocate corporate assets to our operating segments. Unallocated corporate assets primarily include cash and cash equivalents, short-term investments, the net book value of corporate property and equipment, and tax-related assets.

Selected financial information by reportable segment and reconciliations to our consolidated totals are as follows:

	13 Weeks Ended				39 Weeks Ended
($ in millions)	October 27, 2012		October 29, 2011		October 27, 2012		October 29, 2011
Operating income:
Stores	$	403	$	255	$	1,043	$	836
Direct	117		91		297		230
Operating income	$	520	$	346	$	1,340	$	1,066

($ in millions)	October 27, 2012		January 28, 2012		October 29, 2011
Segment Assets:
Stores	$	3,903	$	3,315	$	4,002
Direct	734		591		639
Unallocated	3,370		3,516		3,016
Total assets	$	8,007	$	7,422	$	7,657

Net sales by region are allocated based on the location in which the sale was originated. Store sales are allocated based on the location of the store and online sales are allocated based on the location of the distribution center from which the products were shipped. Net sales by geographic location are as follows:

	13 Weeks Ended				39 Weeks Ended
($ in millions)	October 27, 2012		October 29, 2011		October 27, 2012		October 29, 2011
U.S. (1)	$	3,012	$	2,799	$	8,548	$	8,062
Canada	288		261		752		710
Total North America	3,300		3,060		9,300		8,772
Other foreign	564		525		1,626		1,494
Total net sales	$	3,864	$	3,585	$	10,926	$	10,266

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(1) U.S. includes the United States and Puerto Rico.