UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 28, 2023

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number 1-7562

THE GAP, INC.

(Exact name of registrant as specified in its charter)

Delaware	94-1697231
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Two Folsom Street

San Francisco, California 94105

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (415) 427-0100

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.05 par value	GPS	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☑ No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☑    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☑	Accelerated filer	☐	Non-accelerated filer	☐	Smaller reporting company	☐
						Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☑

The number of shares of the registrant’s common stock outstanding as of November 14, 2023 was 370,833,344.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. All statements other than those that are purely historical are forward-looking statements. Words such as “expect,” “anticipate,” “believe,” “estimate,” “intend,” “plan,” “project,” and similar expressions also identify forward-looking statements. Forward-looking statements include, but are not limited to, statements regarding the following:

•the potential impact of global economic conditions on the assumptions and estimates used when preparing the Condensed Consolidated Financial Statements;

•the impact of recent accounting pronouncements;

•the timing of revenue recognition of upfront payments related to our new credit card program agreements with Barclays and Mastercard;

•the timing of recognition in income of unrealized gains and losses from designated cash flow hedges;

•the impact of losses due to indemnification obligations on the Condensed Consolidated Financial Statements;

•the outcome of proceedings, lawsuits, disputes, and claims, including the impact of such actions on the Condensed Consolidated Financial Statements and our financial results;

•our arrangements with third parties to operate stores and websites selling apparel and related products under our brand names;

•our plans to rationalize the Gap and Banana Republic store fleet by reducing the number of Gap and Banana Republic stores in North America;

•managing inventory to facilitate margin recovery and optimizing our cost structure with operational and financial rigor;

•reinvigorating our brands to drive relevance and an engaging omni-channel experience;

•creating trend-right product assortments while driving creative excellence and delivering consistent product with storytelling that excites our customers;

•rationalizing the Gap and Banana Republic store fleet;

•attracting and retaining strong talent in our businesses and functions;

•continuing to integrate social and environmental sustainability into business practices to support long-term growth;

•our ability to supplement near-term liquidity, if necessary, with the ABL Facility or other available market instruments;

•the impact of seasonality and global economic conditions on certain asset and liability accounts as well as cash inflows and outflows;

•the ability of our cash flows from our operations, current balances of cash and cash equivalents, the Senior Notes and the ABL Facility, and other available market instruments to support our business operations and liquidity requirements;

•the importance of our sustained ability to generate free cash flow, which is a non-GAAP financial measure and is defined and discussed in more detail in Item 2 of Part 1 of this Form 10-Q below;

•our dividend policy, including the potential timing and amounts of future dividends;

•the impact of reductions in our credit ratings on our interest expense on future borrowings; and

•the impact of changes in internal control over financial reporting, including the impact of our restructuring plan on our internal control over financial reporting.

Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, without limitation, the following:

•the overall global economic and geopolitical environment and the impact on consumer spending patterns;

•the risk that we fail to maintain, enhance, and protect our brand image and reputation;

•the highly competitive nature of our business in the United States and internationally;

•the risk that we may be unable to manage or protect our inventory effectively and the resulting impact on our gross margins, sales, and results of operations;

•the risk that we fail to manage key executive succession and retention and to continue to attract and retain qualified personnel;

•the risk that we or our franchisees may be unsuccessful in gauging apparel trends and changing consumer preferences or responding with sufficient lead time;

•the risk that restructuring our business may not generate the intended benefits and projected cost savings to the extent or on the timeline as expected;

•the risk that inflationary pressures continue to negatively impact gross margins or that we are unable to pass along price increases;

•the risks to our business, including our costs and supply chain, associated with global sourcing and manufacturing;

•the risks to our reputation or operations associated with importing merchandise from foreign countries, including failure of our vendors to adhere to our Code of Vendor Conduct;

•the risk that trade matters could increase the cost or reduce the supply of apparel available to us;

•reductions in income and cash flow from our credit card arrangement related to our private label and co-branded credit cards;

•the risk of data or other security breaches or vulnerabilities that may result in increased costs, violations of law, significant legal and financial exposure, and a loss of confidence in our security measures;

•the risk that failures of, or updates or changes to, our IT systems may disrupt our operations;

•the risk that our franchisees and licensees could impair the value of our brands or fail to make payments for which we are liable;

•natural disasters, public health crises, political crises, negative global climate patterns, or other catastrophic events;

•acts of terrorism or war, including the conflict between Russia and Ukraine and the conflict in Israel, and the impact on global market stability;

•the risk that our investments in customer, digital, and omni-channel shopping initiatives may not deliver the results we anticipate;

•engaging in or seeking to engage in strategic transactions that are subject to various risks and uncertainties;

•the risk that our efforts to expand internationally may not be successful;

•the risk of foreign currency exchange rate fluctuations;

•the risk that our comparable sales and margins may experience fluctuations, that the seasonality of our business may experience changes, or that we may fail to meet financial market expectations;

•the risk that we or our franchisees may be unsuccessful in identifying, negotiating, and securing new store locations and renewing, modifying, or terminating leases for existing store locations effectively;

•the adverse effects of climate change on our operations and those of our franchisees, vendors and other business partners;

•the risk that we will not be successful in defending various proceedings, lawsuits, disputes, and claims;

•our failure to comply with applicable laws and regulations and changes in the regulatory or administrative landscape;

•our failure to satisfy regulations and market expectations related to our ESG initiatives;

•the risk that changes in our credit profile or deterioration in market conditions may limit our access to the capital markets;

•the risk that our level of indebtedness may impact our ability to operate and expand our business;

•the risk that we and our subsidiaries may be unable to meet our obligations under our indebtedness agreements;

•the risk that worsening global economic and geopolitical conditions could result in changes to the assumptions and estimates used when preparing the Condensed Consolidated Financial Statements;

•the risk that changes in our business structure, our performance or our industry could result in reductions in our pre-tax income or utilization of existing tax carryforwards in future periods, and require additional deferred tax valuation allowances;

•the risk that changes in the geographic mix and level of income or losses, the expected or actual outcome of audits, changes in deferred tax valuation allowances, and new legislation could impact our effective tax rate; and

•the risk that the adoption of new accounting pronouncements will impact future results.

Additional information regarding factors that could cause results to differ can be found in our Annual Report on Form 10-K for the fiscal year ended January 28, 2023 and our other filings with the U.S. Securities and Exchange Commission.

Future economic and industry trends that could potentially impact net sales and profitability are difficult to predict. These forward-looking statements are based on information as of November 21, 2023. We assume no obligation to publicly update or revise our forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.

We suggest that this document be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended January 28, 2023.

THE GAP, INC.

TABLE OF CONTENTS

		Page
	PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of October 28, 2023, January 28, 2023, and October 29, 2022	1
	Condensed Consolidated Statements of Operations for the 13 Weeks and 39 Weeks Ended October 28, 2023 and October 29, 2022	2
	Condensed Consolidated Statements of Comprehensive Income for the 13 Weeks and 39 Weeks Ended October 28, 2023 and October 29, 2022	3
	Condensed Consolidated Statements of Stockholders' Equity for the 13 Weeks and 39 Weeks Ended October 28, 2023 and October 29, 2022	4
	Condensed Consolidated Statements of Cash Flows for the 39 Weeks Ended October 28, 2023 and October 29, 2022	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	26
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 5.	Other Information	27
Item 6.	Exhibits	28

PART I – FINANCIAL INFORMATION

Item 1.     Financial Statements.

THE GAP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

($ and shares in millions except par value)	October 28, 2023		January 28, 2023		October 29, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	1,351	$	1,215	$	679
Merchandise inventory	2,377		2,389		3,043
Other current assets	646		1,013		1,316
Total current assets	4,374		4,617		5,038
Property and equipment, net of accumulated depreciation of $4,890, $4,837, and $4,957	2,552		2,688		2,788
Operating lease assets	3,200		3,173		3,341
Other long-term assets	926		908		833
Total assets	$	11,052	$	11,386	$	12,000
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,433	$	1,320	$	1,388
Accrued expenses and other current liabilities	1,078		1,219		1,245
Current portion of operating lease liabilities	604		667		691
Income taxes payable	24		50		57
Total current liabilities	3,139		3,256		3,381
Long-term liabilities:
Revolving credit facility	—		350		350
Long-term debt	1,488		1,486		1,486
Long-term operating lease liabilities	3,456		3,517		3,673
Other long-term liabilities	509		544		539
Total long-term liabilities	5,453		5,897		6,048
Commitments and contingencies (see Note 10)
Stockholders’ equity:
Common stock $0.05 par value
Authorized 2,300 shares for all periods presented; Issued and Outstanding 371, 366, and 365 shares	18		18		18
Additional paid-in capital	93		27		16
Retained earnings	2,291		2,140		2,468
Accumulated other comprehensive income	58		48		69
Total stockholders’ equity	2,460		2,233		2,571
Total liabilities and stockholders’ equity	$	11,052	$	11,386	$	12,000

See Accompanying Notes to Condensed Consolidated Financial Statements

1

THE GAP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	13 Weeks Ended				39 Weeks Ended
($ and shares in millions except per share amounts)	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Net sales	$	3,767	$	4,039	$	10,591	$	11,373
Cost of goods sold and occupancy expenses	2,211		2,530		6,488		7,438
Gross profit	1,556		1,509		4,103		3,935
Operating expenses	1,306		1,323		3,757		3,974
Operating income (loss)	250		186		346		(39)
Interest expense	28		22		66		63
Interest income	(28)		(4)		(58)		(6)
Income (loss) before income taxes	250		168		338		(96)
Income tax expense (benefit)	32		(114)		21		(167)
Net income	$	218	$	282	$	317	$	71
Weighted-average number of shares - basic	371		365		369		367
Weighted-average number of shares - diluted	375		366		373		370
Earnings per share - basic	$	0.59	$	0.77	$	0.86	$	0.19
Earnings per share - diluted	$	0.58	$	0.77	$	0.85	$	0.19

See Accompanying Notes to Condensed Consolidated Financial Statements

2

THE GAP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	13 Weeks Ended				39 Weeks Ended
($ in millions)	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Net income	$	218	$	282	$	317	$	71
Other comprehensive income, net of tax
Foreign currency translation	5		6		1		13
Change in fair value of derivative financial instruments, net of tax expense of $1, $1, $3, $3	16		31		22		40
Reclassification adjustment for gains on derivative financial instruments, net of tax benefit of $1, $—, $—, $—	(7)		(14)		(13)		(22)
Other comprehensive income, net of tax	14		23		10		31
Comprehensive income	$	232	$	305	$	327	$	102

See Accompanying Notes to Condensed Consolidated Financial Statements

3

THE GAP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income
($ and shares in millions except per share amounts)	Shares	Amount								Total
Balance as of July 29, 2023	369	$	18	$	73	$	2,128	$	44	$	2,263
Net income for the 13 weeks ended October 28, 2023						218				218
Other comprehensive income, net of tax
Foreign currency translation								5		5
Change in fair value of derivative financial instruments								16		16
Amounts reclassified from accumulated other comprehensive income								(7)		(7)
Issuance of common stock related to stock options and employee stock purchase plans	1	—		5						5
Issuance of common stock and withholding tax payments related to vesting of stock units	1	—		(5)						(5)
Share-based compensation, net of forfeitures				20						20
Common stock dividends declared and paid ($0.15 per share)						(55)				(55)
Balance as of October 28, 2023	371	$	18	$	93	$	2,291	$	58	$	2,460
Balance as of July 30, 2022	364	$	18	$	—	$	2,241	$	46	$	2,305
Net income for the 13 weeks ended October 29, 2022						282				282
Other comprehensive income, net of tax
Foreign currency translation								6		6
Change in fair value of derivative financial instruments								31		31
Amounts reclassified from accumulated other comprehensive income								(14)		(14)
Repurchases and retirement of common stock	(2)	—		(12)						(12)
Issuance of common stock related to stock options and employee stock purchase plans	1	—		8						8
Issuance of common stock and withholding tax payments related to vesting of stock units	2	—		(2)						(2)
Share-based compensation, net of forfeitures				22						22
Common stock dividends declared and paid ($0.15 per share)						(55)				(55)
Balance as of October 29, 2022	365	$	18	$	16	$	2,468	$	69	$	2,571

    

See Accompanying Notes to Condensed Consolidated Financial Statements

4

THE GAP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income
($ and shares in millions except per share amounts)	Shares	Amount								Total
Balance as of January 28, 2023	366	$	18	$	27	$	2,140	$	48	$	2,233
Net income for the 39 weeks ended October 28, 2023						317				317
Other comprehensive income, net of tax
Foreign currency translation								1		1
Change in fair value of derivative financial instruments								22		22
Amounts reclassified from accumulated other comprehensive income								(13)		(13)
Issuance of common stock related to stock options and employee stock purchase plans	2	—		18						18
Issuance of common stock and withholding tax payments related to vesting of stock units	3	—		(16)						(16)
Share-based compensation, net of forfeitures				64						64
Common stock dividends declared and paid ($0.45 per share)						(166)				(166)
Balance as of October 28, 2023	371	$	18	$	93	$	2,291	$	58	$	2,460
Balance as of January 29, 2022	371	$	19	$	43	$	2,622	$	38	$	2,722
Net income for the 39 weeks ended October 29, 2022						71				71
Other comprehensive income, net of tax
Foreign currency translation								13		13
Change in fair value of derivative financial instruments								40		40
Amounts reclassified from accumulated other comprehensive income								(22)		(22)
Repurchases and retirement of common stock	(11)	(1)		(63)		(59)				(123)
Issuance of common stock related to stock options and employee stock purchase plans	2	—		23						23
Issuance of common stock and withholding tax payments related to vesting of stock units	3	—		(17)						(17)
Share-based compensation, net of forfeitures				30						30
Common stock dividends declared and paid ($0.45 per share)						(166)				(166)
Balance as of October 29, 2022	365	$	18	$	16	$	2,468	$	69	$	2,571

See Accompanying Notes to Condensed Consolidated Financial Statements

5

THE GAP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	39 Weeks Ended
($ in millions)	October 28, 2023		October 29, 2022
Cash flows from operating activities:
Net income	$	317	$	71
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Depreciation and amortization	394		402
Share-based compensation	64		28
Impairment of operating lease assets	—		16
Impairment of store assets	2		10
Amortization of debt issuance costs	3		5
Non-cash and other items	36		(8)
Loss on divestiture activity	—		35
Gain on sale of building	(47)		(83)
Deferred income taxes	(27)		32
Changes in operating assets and liabilities:
Merchandise inventory	(5)		(78)
Other current assets and other long-term assets	81		(34)
Accounts payable	133		(503)
Accrued expenses and other current liabilities	(11)		(123)
Income taxes payable, net of receivables and other tax-related items	50		216
Other long-term liabilities	(11)		(7)
Operating lease assets and liabilities, net	(147)		(91)
Net cash provided by (used for) operating activities	832		(112)
Cash flows from investing activities:
Purchases of property and equipment	(288)		(577)
Net proceeds from sale of buildings	76		458
Net proceeds from divestiture activity	9		—
Net cash used for investing activities	(203)		(119)
Cash flows from financing activities:
Proceeds from revolving credit facility	—		350
Repayments of revolving credit facility	(350)		—
Payments for debt issuance costs	—		(6)
Proceeds from issuances under share-based compensation plans	18		23
Withholding tax payments related to vesting of stock units	(16)		(17)
Repurchases of common stock	—		(123)
Cash dividends paid	(166)		(166)
Other	(2)		(1)
Net cash provided by (used for) financing activities	(516)		60
Effect of foreign exchange rate fluctuations on cash, cash equivalents, and restricted cash	(7)		(25)
Net increase (decrease) in cash, cash equivalents, and restricted cash	106		(196)
Cash, cash equivalents, and restricted cash at beginning of period	1,273		902
Cash, cash equivalents, and restricted cash at end of period	$	1,379	$	706
Supplemental disclosure of cash flow information:
Cash paid for interest during the period	$	72	$	70
Cash paid for income taxes during the period, net of refunds	$	(1)	$	(407)

See Accompanying Notes to Condensed Consolidated Financial Statements

6

THE GAP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Accounting Policies

Basis of Presentation

In the opinion of The Gap, Inc. (the “Company,” “we,” and “our”) management, the accompanying unaudited Condensed Consolidated Financial Statements contain all normal and recurring adjustments (except as otherwise disclosed) considered necessary to present fairly our financial position, results of operations, comprehensive income, stockholders' equity, and cash flows as of October 28, 2023 and October 29, 2022 and for all periods presented. The Condensed Consolidated Balance Sheet as of January 28, 2023 has been derived from our audited financial statements.

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and disclosures normally included in the notes to the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted from these interim financial statements, although the Company believes that the disclosures made are adequate to make the information not misleading. We suggest that you read these Condensed Consolidated Financial Statements in conjunction with the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 28, 2023.

The results of operations for the 13 and 39 weeks ended October 28, 2023 are not necessarily indicative of the operating results that may be expected for the 53-week period ending February 3, 2024.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. Additionally, these estimates and assumptions may change as a result of the impact of global economic conditions such as the uncertainty regarding global inflationary pressures, acts of terrorism or war, global credit and banking markets, and new legislation. We will continue to consider the impact of the global economic conditions on the assumptions and estimates used when preparing these Condensed Consolidated Financial Statements including inventory valuation, income taxes and valuation allowances, sales return and bad debt allowances, deferred revenue, and the impairment of long-lived assets. If the global economic conditions worsen beyond what is currently estimated by management, such future changes may have an adverse impact on the Company's results of operations and financial position.

Restricted Cash

As of October 28, 2023, restricted cash primarily included consideration that serves as collateral for our insurance obligations and certain other obligations occurring in the normal course of business. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within our Condensed Consolidated Balance Sheets to the total shown on our Condensed Consolidated Statements of Cash Flows:

($ in millions)	October 28, 2023		January 28, 2023		October 29, 2022
Cash and cash equivalents, per Condensed Consolidated Balance Sheets	$	1,351	$	1,215	$	679
Restricted cash included in other current assets	—		32		1
Restricted cash included in other long-term assets	28		26		26
Total cash, cash equivalents, and restricted cash, per Condensed Consolidated Statements of Cash Flows	$	1,379	$	1,273	$	706

Accounting Pronouncements

Except as noted below, the Company has considered all recent accounting pronouncements and concluded that there are no recent accounting pronouncements that may have a material impact on our Condensed Consolidated Financial Statements and disclosures, based on current information.

ASU No. 2022-04, Disclosure of Supplier Finance Program Obligations

In September 2022, the Financial Accounting Standards Board issued accounting standards update ("ASU") No. 2022-04, Disclosure of Supplier Finance Program Obligations. The ASU is intended to enhance the transparency of the use of supplier finance programs by requiring that the buyers in those programs provide additional disclosures about the program’s nature and potential magnitude, including a rollforward of the obligations and activity during the period. The ASU is effective retrospectively for fiscal years and interim periods within those years beginning after December 15, 2022, except for the rollforward information, which is effective prospectively for fiscal years beginning after December 15, 2023. The ASU does not affect the recognition, measurement, or financial statement presentation of supplier finance program obligations. We adopted this ASU on January 29, 2023. See Note 13 of Notes to Condensed Consolidated Financial Statements for information regarding our supply chain finance program.

Note 2. Revenue

Disaggregation of Net Sales

We disaggregate our net sales by channel and also by brand and region. Net sales by region are allocated based on the location of the store where the customer paid for and received the merchandise or the distribution center or store from which the products were shipped.

Net sales disaggregated by channel are as follows:

	13 Weeks Ended				39 Weeks Ended
($ in millions)	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Store and franchise sales	$	2,331	$	2,478	$	6,771	$	7,168
Online sales (1)	1,436		1,561		3,820		4,205
Total net sales	$	3,767	$	4,039	$	10,591	$	11,373

__________

(1)Online sales primarily include sales originating from our online channel including those that are picked up or shipped from stores and net sales from revenue-generating strategic initiatives.

7

Net sales disaggregated by brand and region are as follows:

($ in millions)	Old Navy Global		Gap Global		Banana Republic Global		Athleta Global		Other (2)		Total
13 Weeks Ended October 28, 2023
U.S. (1)	$	1,917	$	664	$	398	$	267	$	15	$	3,261
Canada	193		96		42		10		—		341
Europe	—		29		1		—		—		30
Asia	1		71		12		—		—		84
Other regions	15		27		7		2		—		51
Total	$	2,126	$	887	$	460	$	279	$	15	$	3,767

($ in millions)	Old Navy Global		Gap Global		Banana Republic Global		Athleta Global		Other (2)		Total
13 Weeks Ended October 29, 2022
U.S. (1)	$	1,936	$	690	$	448	$	326	$	4	$	3,404
Canada	184		95		47		7		—		333
Europe	1		58		1		1		—		61
Asia	—		143		14		—		—		157
Other regions	16		55		7		6		—		84
Total	$	2,137	$	1,041	$	517	$	340	$	4	$	4,039

($ in millions)	Old Navy Global		Gap Global		Banana Republic Global		Athleta Global		Other (2)		Total
39 Weeks Ended October 28, 2023
U.S. (1)	$	5,353	$	1,702	$	1,187	$	903	$	29	$	9,174
Canada	503		233		122		33		—		891
Europe	1		87		2		1		—		91
Asia	2		225		40		—		—		267
Other regions	56		87		21		4		—		168
Total	$	5,915	$	2,334	$	1,372	$	941	$	29	$	10,591

($ in millions)	Old Navy Global		Gap Global		Banana Republic Global		Athleta Global		Other (2)		Total
39 Weeks Ended October 29, 2022
U.S. (1)	$	5,489	$	1,752	$	1,324	$	1,005	$	10	$	9,580
Canada	514		241		143		23		—		921
Europe	2		163		4		3		—		172
Asia	1		425		48		—		—		474
Other regions	62		132		19		13		—		226
Total	$	6,068	$	2,713	$	1,538	$	1,044	$	10	$	11,373

__________

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

(2)Primarily consists of net sales from revenue-generating strategic initiatives.

Deferred Revenue

We defer revenue when cash payments are received in advance of performance for unsatisfied obligations related to our gift cards, licensing agreements, outstanding loyalty points, and reimbursements of loyalty program discounts associated with our credit card agreement. For the 13 weeks ended October 28, 2023, the opening balance of deferred revenue for these obligations was $327 million, of which $119 million was recognized as revenue during the period. For the 39 weeks ended October 28, 2023, the opening balance of deferred revenue for these obligations was $354 million, of which $227 million was recognized as revenue during the period. The closing balance of deferred revenue for these obligations was $315 million as of October 28, 2023.

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For the 13 weeks ended October 29, 2022, the opening balance of deferred revenue for these obligations was $321 million, of which $119 million was recognized as revenue during the period. For the 39 weeks ended October 29, 2022, the opening balance of deferred revenue for these obligations was $345 million, of which $212 million was recognized as revenue during the period. The closing balance of deferred revenue for these obligations was $323 million as of October 29, 2022.

In April 2021, the Company entered into agreements with Barclays and Mastercard relating to a new long-term credit card program. In May 2022, the Company launched the new credit card program with Barclays and Mastercard and accordingly, our prior credit card program with Synchrony Financial was discontinued. The Company received an upfront payment of $60 million related to the new agreements prior to the program launch, which is being recognized as revenue over the term of the agreements.

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Note 3. Restructuring

On April 25, 2023, the Company's management committed to a restructuring plan (the "Plan") as part of the Company's previously announced efforts to simplify and optimize its operating model and structure. The Plan includes a reduction in workforce of approximately 1,800 employees, primarily in headquarters locations. The actions associated with the reduction of the Company's workforce under the Plan have been substantially completed.

In connection with the Plan, the Company incurred $5 million and $93 million in pre-tax restructuring costs during the 13 and 39 weeks ended October 28, 2023, respectively. The costs incurred in connection with the Plan are as follows:

	13 Weeks Ended October 28, 2023						39 Weeks Ended October 28, 2023
($ in millions)	Cost of Goods Sold and Occupancy Expenses		Operating Expenses		Total Costs		Cost of Goods Sold and Occupancy Expenses		Operating Expenses		Total Costs
Employee-related costs	$	—	$	(1)	$	(1)	$	4	$	60	$	64
Consulting and other associated costs	—		6		6		—		29		29
Total restructuring costs	$	—	$	5	$	5	$	4	$	89	$	93

The following table summarizes restructuring costs that will be settled with cash payments and the related liability balances as of October 28, 2023, which are primarily included in accrued expenses and other current liabilities on the Condensed Consolidated Balance Sheet:

($ in millions)	Employee-Related Costs		Consulting and Other Associated Costs		Total
Balance at January 28, 2023	$	—	$	—	$	—
13 Weeks Ended April 29, 2023
Provision	62		13		75
Cash payments	—		(10)		(10)
Balance at April 29, 2023	62		3		65
13 Weeks Ended July 29, 2023
Provision	3		10		13
Cash payments	(45)		(7)		(52)
Balance at July 29, 2023	20		6		26
13 Weeks Ended October 28, 2023
Provision	—		6		6
Adjustments	(1)		—		(1)
Cash payments	(11)		(12)		(23)
Balance at October 28, 2023	$	8	$	—	$	8

Note 4. Income Taxes

The effective income tax rate was 12.8 percent for the 13 weeks ended October 28, 2023, compared with negative 67.9 percent for the 13 weeks ended October 29, 2022. The change in the effective tax rate for the 13 weeks ended October 28, 2023 compared with the 13 weeks ended October 29, 2022 is primarily due to changes in the amount and jurisdictional mix of pre-tax earnings, the cumulative impact of a change in the Company's estimated annual effective tax rate recognized in the prior year, and a current year tax benefit from the impact of foreign valuation allowances.

The effective income tax rate was 6.2 percent for the 39 weeks ended October 28, 2023, compared with 174.0 percent for the 39 weeks ended October 29, 2022. The change in the effective tax rate for the 39 weeks ended October 28, 2023 compared with the 39 weeks ended October 29, 2022 is primarily due to changes in the amount and jurisdictional mix of pre-tax earnings, the cumulative impact of a change in the Company's estimated annual effective tax rate recognized in the prior year, and current year tax benefits from the impact of valuation allowances and a U.S. transfer pricing settlement related to our sourcing activities.

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Note 5. Debt and Credit Facilities

Long-term debt recorded on the Condensed Consolidated Balance Sheets consists of the following:

($ in millions)	October 28, 2023		January 28, 2023		October 29, 2022
2029 Notes	$	750	$	750	$	750
2031 Notes	750		750		750
Less: Unamortized debt issuance costs	(12)		(14)		(14)
Total long-term debt	$	1,488	$	1,486	$	1,486

The scheduled maturity of the Senior Notes is as follows:

Scheduled Maturity ($ in millions)	Principal		Interest Rate		Interest Payments
October 1, 2029 (1)	$	750	3.625	%	Semi-Annual
October 1, 2031 (2)	750		3.875	%	Semi-Annual
Total issuance	$	1,500

__________

(1)Includes an option to redeem the 2029 Notes, in whole or in part at any time, subject to a make-whole premium, prior to October 1, 2024. On or after October 1, 2024, includes an option to redeem the 2029 Notes, in whole or in part at any time, at stated redemption prices.

(2)Includes an option to redeem the 2031 Notes, in whole or in part at any time, subject to a make-whole premium, prior to October 1, 2026. On or after October 1, 2026, includes an option to redeem the 2031 Notes, in whole or in part at any time, at stated redemption prices.

On September 27, 2021, we completed the issuance of $1.5 billion aggregate principal amount of 3.625 percent senior notes due 2029 (“2029 Notes”) and 3.875 percent senior notes due 2031 (“2031 Notes”) (the 2029 Notes and the 2031 Notes, collectively, the “Senior Notes”). As of October 28, 2023, the aggregate estimated fair value of the Senior Notes was $1.10 billion and was based on the quoted market prices for each of the Senior Notes (level 1 inputs) as of the last business day of the fiscal quarter. The aggregate principal amount of the Senior Notes is recorded in long-term debt on the Condensed Consolidated Balance Sheets, net of the unamortized debt issuance costs.

On May 7, 2020, we entered into a senior secured asset-based revolving credit agreement (the "ABL Facility"), which was previously scheduled to expire in May 2023. On July 13, 2022, we entered into an amendment and restatement of the ABL Facility. Among other changes, the amendment and restatement extended the maturity of the ABL Facility to July 2027, increased the borrowing capacity from $1.8675 billion to $2.2 billion, modified the reference rate from the London Interbank Offered Rate ("LIBOR") to the Secured Overnight Financing Rate ("SOFR"), and reduced the applicable interest rate margin. Following the amendment and restatement, the ABL Facility generally bears interest at a per annum rate based on SOFR (subject to a zero floor) plus a margin, depending on borrowing base availability. The ABL Facility is available for working capital, capital expenditures, and other general corporate purposes.

As of January 28, 2023 and October 29, 2022, the Company's outstanding borrowing under the ABL Facility was $350 million and was recorded in long-term liabilities on the Condensed Consolidated Balance Sheet. In the second quarter of fiscal 2023, the Company repaid an aggregate of $200 million to reduce the outstanding borrowing under the ABL Facility to $150 million as of July 29, 2023. During the 13 weeks ended October 28, 2023, the Company repaid the remaining $150 million outstanding borrowing under the ABL Facility. There were no borrowings under the ABL Facility as of October 28, 2023.

We also have the ability to issue letters of credit on our ABL Facility. As of October 28, 2023, we had $49 million in standby letters of credit issued under the ABL Facility.

Note 6. Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value on a recurring basis. The Company categorizes financial assets and liabilities recorded at fair value based upon a three-level hierarchy that considers the related valuation techniques.

There were no material purchases, sales, issuances, or settlements related to recurring level 3 measurements for the 13 and 39 weeks ended October 28, 2023 or October 29, 2022.

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Financial assets and liabilities measured at fair value on a recurring basis and cash equivalents held at amortized cost are as follows:

			Fair Value Measurements at Reporting Date Using
($ in millions)	October 28, 2023		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	1	$	—	$	1	$	—
Derivative financial instruments	34		—		34		—
Deferred compensation plan assets	31		31		—		—
Other assets	4		—		—		4
Total	$	70	$	31	$	35	$	4
Liabilities:
Derivative financial instruments	$	—	$	—	$	—	$	—
			Fair Value Measurements at Reporting Date Using
($ in millions)	January 28, 2023		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	15	$	—	$	15	$	—
Derivative financial instruments	11		—		11		—
Deferred compensation plan assets	34		34		—		—
Other assets	4		—		—		4
Total	$	64	$	34	$	26	$	4
Liabilities:
Derivative financial instruments	$	20	$	—	$	20	$	—
			Fair Value Measurements at Reporting Date Using
($ in millions)	October 29, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	19	$	—	$	19	$	—
Derivative financial instruments	46		—		46		—
Deferred compensation plan assets	37		37		—		—
Other assets	4		—		—		4
Total	$	106	$	37	$	65	$	4
Liabilities:
Derivative financial instruments	$	2	$	—	$	2	$	—

We have highly liquid fixed and variable income investments classified as cash equivalents. We value these investments at their original purchase prices plus interest that has accrued at the stated rate. Our cash equivalents are placed primarily in time deposits.

Derivative financial instruments primarily include foreign exchange forward contracts. See Note 7 of Notes to Condensed Consolidated Financial Statements for information regarding currencies hedged against the U.S. dollar.

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We maintain the Gap, Inc. Deferred Compensation Plan (“DCP”), which allows eligible employees to defer base compensation and bonus up to a maximum percentage, and non-employee directors to defer receipt of a portion of their Board fees. Plan investments are directed by participants and are recorded at market value and designated for the DCP. The fair value of the Company’s DCP assets is determined based on quoted market prices, and the assets are recorded in other long-term assets on the Condensed Consolidated Balance Sheets.

Nonfinancial Assets

We review the carrying amount of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The fair value of the long-lived assets is determined using level 3 inputs and based on discounted future cash flows of the asset or asset group using a discount rate commensurate with the risk. The asset group is defined as the lowest level for which identifiable cash flows are available and largely independent of the cash flows of other groups of assets, which for our retail stores is at the store level.

There were no material impairment charges recorded for long-lived assets during the 13 and 39 weeks ended October 28, 2023.

During the 39 weeks ended October 29, 2022, the Company recorded impairment of store assets of $10 million and impairment of operating lease assets of $16 million. The impairment of the store assets reduced the carrying amount of the applicable long-lived assets of $12 million to their estimated fair value of $2 million. The impairment of operating lease assets reduced the carrying amount of the applicable long-lived assets of $62 million to their estimated fair value of $46 million. The impairment charges were recorded in operating expenses on the Condensed Consolidated Statement of Operations.

We review the carrying amount of goodwill and other indefinite-lived intangible assets for impairment annually and whenever events or changes in circumstances indicate that it is more likely than not that the carrying amount may not be recoverable.

There were no impairment charges recorded for goodwill or other indefinite-lived intangible assets for the 13 and 39 weeks ended October 28, 2023 or October 29, 2022.

Note 7. Derivative Financial Instruments

We operate in foreign countries, which exposes us to market risk associated with foreign currency exchange rate fluctuations. We use derivative financial instruments to manage our exposure to foreign currency exchange rate risk and do not enter into derivative financial contracts for trading purposes. Consistent with our risk management guidelines, we hedge a portion of our transactions related to merchandise purchases for foreign operations and certain intercompany transactions using foreign exchange forward contracts. These contracts are entered into with large, reputable financial institutions that are monitored for counterparty risk. The currencies hedged against changes in the U.S. dollar are the Canadian dollar, Japanese yen, British pound, Mexican peso, New Taiwan dollar, and Euro. Cash flows from derivative financial instruments are classified as cash flows from operating activities on the Condensed Consolidated Statements of Cash Flows.

Derivative financial instruments are recorded at fair value on the Condensed Consolidated Balance Sheets as other current assets, other long-term assets, accrued expenses and other current liabilities, or other long-term liabilities.

Cash Flow Hedges

We designate foreign exchange forward contracts used to hedge forecasted merchandise purchases and related costs denominated in U.S. dollars made by our international subsidiaries whose functional currencies are their local currencies as cash flow hedges. The foreign exchange forward contracts entered into to hedge forecasted merchandise purchases and related costs generally have terms of up to 24 months. The effective portion of the gain or loss on the derivative financial instruments is reported as a component of other comprehensive income and is recognized into net income during the period in which the underlying transaction impacts the Condensed Consolidated Statements of Operations.

Other Derivatives Not Designated as Hedging Instruments

We use foreign exchange forward contracts to hedge our market risk exposure associated with foreign currency exchange rate fluctuations for certain intercompany balances denominated in currencies other than the functional currency of the entity with the intercompany balance. The gain or loss on the derivative financial instruments that represent economic hedges, as well as the remeasurement impact of the underlying intercompany balances, is recorded in operating expenses on the Condensed Consolidated Statements of Operations in the same period and generally offset each other.

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Outstanding Notional Amounts

We had foreign exchange forward contracts outstanding in the following notional amounts:

($ in millions)	October 28, 2023		January 28, 2023		October 29, 2022
Derivatives designated as cash flow hedges	$	357	$	441	$	491
Derivatives not designated as hedging instruments	526		645		583
Total	$	883	$	1,086	$	1,074

Quantitative Disclosures about Derivative Financial Instruments

The fair values of foreign exchange forward contracts are as follows:

($ in millions)	October 28, 2023		January 28, 2023		October 29, 2022
Derivatives designated as cash flow hedges:
Other current assets	$	13	$	9	$	25
Other long-term assets	2		—		4
Accrued expenses and other current liabilities	—		5		—
Other long-term liabilities	—		—		—
Derivatives not designated as hedging instruments:
Other current assets	19		2		17
Accrued expenses and other current liabilities	—		15		2
Total derivatives in an asset position	$	34	$	11	$	46
Total derivatives in a liability position	$	—	$	20	$	2

The majority of the unrealized gains and losses from designated cash flow hedges as of October 28, 2023 will be recognized in income within the next 12 months at the then-current values, which may differ from the fair values as of October 28, 2023 shown above.

Our foreign exchange forward contracts are subject to master netting arrangements with each of our counterparties and such arrangements are enforceable in the event of default or early termination of the contract. We do not elect to offset the fair values of our derivative financial instruments on the Condensed Consolidated Balance Sheets, and as such, the fair values shown above represent gross amounts. The amounts subject to enforceable master netting arrangements were not material for all periods presented.

See Note 6 of Notes to Condensed Consolidated Financial Statements for disclosures on the fair value measurements of our derivative financial instruments.

The pre-tax amounts recognized in net income related to derivative instruments are as follows:

	Location and Amount of Gain Recognized in Net Income
	13 Weeks Ended October 28, 2023				13 Weeks Ended October 29, 2022
($ in millions)	Cost of goods sold and occupancy expenses		Operating expenses		Cost of goods sold and occupancy expenses		Operating expenses
Total amount of expense line items presented in the Condensed Consolidated Statements of Operations in which the effects of derivatives are recorded	$	2,211	$	1,306	$	2,530	$	1,323
Gain recognized in net income
Derivatives designated as cash flow hedges	(6)		—		(14)		—
Derivatives not designated as hedging instruments	—		(27)		—		(51)
Total gain recognized in net income	$	(6)	$	(27)	$	(14)	$	(51)

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	Location and Amount of Gain Recognized in Net Income
	39 Weeks Ended October 28, 2023				39 Weeks Ended October 29, 2022
($ in millions)	Cost of goods sold and occupancy expense		Operating expenses		Cost of goods sold and occupancy expense		Operating expenses
Total amount of expense line items presented in the Condensed Consolidated Statements of Operations in which the effects of derivatives are recorded	$	6,488	$	3,757	$	7,438	$	3,974
Gain recognized in net income
Derivatives designated as cash flow hedges	(13)		—		(22)		—
Derivatives not designated as hedging instruments	—		(25)		—		(80)
Total gain recognized in net income	$	(13)	$	(25)	$	(22)	$	(80)

Note 8. Share Repurchases

Share repurchase activity is as follows:

	13 Weeks Ended				39 Weeks Ended
($ and shares in millions except average per share cost)	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Number of shares repurchased (1)	—		1.2		—		10.6
Total cost	$	—	$	12	$	—	$	123
Average per share cost including commissions	$	—	$	10.20	$	—	$	11.59

_________

(1)Excludes shares withheld to settle employee statutory tax withholding related to the vesting of stock units.

In February 2019, the Company's Board of Directors (the "Board") approved a $1.0 billion share repurchase authorization (the "February 2019 repurchase program"). The February 2019 repurchase program had $476 million remaining as of October 28, 2023. All common stock repurchased is immediately retired.

Note 9. Earnings Per Share

Weighted-average number of shares used for earnings per share is as follows:

	13 Weeks Ended		39 Weeks Ended
(shares in millions)	October 28, 2023	October 29, 2022	October 28, 2023	October 29, 2022
Weighted-average number of shares - basic	371	365	369	367
Common stock equivalents	4	1	4	3
Weighted-average number of shares - diluted	375	366	373	370

The anti-dilutive shares related to stock options and other stock awards excluded from the computation of weighted-average number of shares – diluted were 5 million and 14 million for the 13 weeks ended October 28, 2023 and October 29, 2022, respectively, and 6 million and 14 million for the 39 weeks ended October 28, 2023 and October 29, 2022, respectively, as their inclusion would have an anti-dilutive effect on earnings per share.

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Note 10. Commitments and Contingencies

We are a party to a variety of contractual agreements under which we may be obligated to indemnify the other party for certain matters. These contracts primarily relate to our commercial contracts, operating leases, trademarks, intellectual property, financial agreements, and various other agreements. Under these contracts, we may provide certain routine indemnifications relating to representations and warranties (e.g., ownership of assets, environmental or tax indemnifications), or personal injury matters. The terms of these indemnifications range in duration and may not be explicitly defined. Generally, the maximum obligation under such indemnifications is not explicitly stated, and as a result, the overall amount of these obligations cannot be reasonably estimated. Historically, we have not made significant payments for these indemnifications. We believe that if we were to incur a loss in any of these matters, the loss would not have a material effect on our Condensed Consolidated Financial Statements taken as a whole.

As a multinational company, we are subject to various proceedings, lawsuits, disputes, and claims ("Actions") arising in the ordinary course of our business. Many of these Actions raise complex factual and legal issues and are subject to uncertainties. As of October 28, 2023, Actions filed against us included commercial, intellectual property, customer, employment, securities, and data privacy claims, including class action lawsuits. The plaintiffs in some Actions seek unspecified damages or injunctive relief, or both. Actions are in various procedural stages and some are covered in part by insurance. As of October 28, 2023, January 28, 2023, and October 29, 2022, we recorded a liability for an estimated loss if the outcome of an Action is expected to result in a loss that is considered probable and reasonably estimable. The liability recorded was not material for any individual Action or in total for all periods presented. Subsequent to October 28, 2023, and through the filing date of this Quarterly Report on Form 10-Q, no information has become available that indicates a change is required that would be material to our Condensed Consolidated Financial Statements taken as a whole.

We cannot predict with assurance the outcome of Actions brought against us. However, we do not believe that the outcome of any current Action would have a material effect on our Condensed Consolidated Financial Statements taken as a whole.

Note 11. Segment Information

We identify our operating segments according to how our business activities are managed and evaluated. As of October 28, 2023, our operating segments included: Old Navy Global, Gap Global, Banana Republic Global, and Athleta Global. Each operating segment has a brand president who is responsible for various geographies and channels. Each of our brands serves customer demand through stores and online channels, leveraging our omni-channel capabilities that allow customers to shop seamlessly across all of our brands. We have determined that each of our operating segments share similar economic and other qualitative characteristics, and therefore the results of our operating segments are aggregated into one reportable segment as of October 28, 2023. We continually monitor and review our segment reporting structure in accordance with authoritative guidance to determine whether any changes have occurred that would impact our reportable segments.

See Note 2 of Notes to Condensed Consolidated Financial Statements for disaggregation of revenue by channel and by brand and region.

Note 12. Divestitures

On February 1, 2022, we completed the transition of our Gap Italy operations to a third party, OVS S.p.A. ("OVS"), to operate Gap Italy stores as a franchise partner. We completed the transition of our United Kingdom and Ireland online operations to a franchise partner through a joint venture with Next Plc on August 10, 2022. The impacts from these transactions upon divestiture were not material to our results of operations for the 39 weeks ended October 29, 2022.

We sold our distribution center in Rugby, England for $125 million on September 30, 2022. As a result of this transaction, the Company recognized a pre-tax gain on sale of $83 million within operating expenses on the Condensed Consolidated Statement of Operations during the 13 weeks ended October 29, 2022.

We also completed the transition of our Old Navy Mexico operations to a third party, Grupo Axo, to operate Old Navy Mexico stores as a franchise partner, on August 1, 2022. As a result of this transaction, the Company recognized a pre-tax loss of $35 million in the second quarter of fiscal 2022 when the assets were reclassified as held for sale. The pre-tax loss was recognized within operating expenses on the Condensed Consolidated Statement of Operations.

On November 7, 2022, we signed agreements to transition our Gap China and Gap Taiwan ("Gap Greater China") operations to a third party, Baozun Inc. ("Baozun"), to operate Gap Greater China stores and the in-market website as a franchise partner, subject to regulatory approvals and closing conditions. On January 31, 2023, the Gap China transaction closed with Baozun. The impact upon divestiture was not material to our results of operations for the 39 weeks ended October 28, 2023. The Gap Taiwan operations will continue to operate as usual until regulatory approvals and closing conditions are met.

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Note 13. Supply Chain Finance Program

Our voluntary supply chain finance ("SCF") program provides certain suppliers with the opportunity to sell their receivables due from us to participating financial institutions at the sole discretion of both the suppliers and the financial institutions. We are not a party to the agreements between our suppliers and the financial institutions and our payment terms are not impacted by whether a supplier participates in the SCF program.

We may agree to side letters with participating financial institutions related to the SCF program that require us to transfer a certain amount of cash to be used as collateral for our payment obligations in a specified period. These collateral amounts, if applicable, are classified as restricted cash on our Condensed Consolidated Balance Sheets. There were no collateral amounts under the SCF program as of October 28, 2023 and October 29, 2022. The collateral amount under the SCF program was $30 million as of January 28, 2023. Additionally, our lenders under the ABL Facility who also participate in the SCF program have their related financings secured pursuant to the terms of the ABL Facility.

The Company's outstanding obligations under the SCF program were $344 million, $316 million, and $206 million as of October 28, 2023, January 28, 2023, and October 29, 2022, respectively, and were included in accounts payable on the Condensed Consolidated Balance Sheets.

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Item 2.     Management's Discussion and Analysis of Financial Condition and Results of Operations.

OUR BUSINESS

We are a collection of purpose-led, lifestyle brands offering apparel, accessories, and personal care products for men, women, and children under the Old Navy, Gap, Banana Republic, and Athleta brands. We have Company-operated stores in the United States, Canada, Japan, and Taiwan. Our products are available to customers online through Company-owned websites and through third party arrangements. 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. 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 to further enhance our shopping experience for our customers. Our omni-channel services, including curbside pick-up, buy online pick-up in store, order-in-store, find-in-store, and ship-from-store, as well as enhanced mobile-enabled experiences, are tailored uniquely across our collection of brands. Most of the products sold under our brand names are designed by us and manufactured by independent sources.

OVERVIEW

Financial results for the third quarter of fiscal 2023 are as follows:

•Net sales for the third quarter of fiscal 2023 decreased 7 percent compared with the third quarter of fiscal 2022.

•Online sales for the third quarter of fiscal 2023 decreased 8 percent compared with the third quarter of fiscal 2022 and store and franchise sales for the third quarter of fiscal 2023 decreased 6 percent compared with the third quarter of fiscal 2022.

•Gross profit for the third quarter of fiscal 2023 was $1.56 billion compared with $1.51 billion for the third quarter of fiscal 2022. Gross margin for the third quarter of fiscal 2023 was 41.3 percent compared with 37.4 percent for the third quarter of fiscal 2022.

•Operating income for the third quarter of fiscal 2023 was $250 million compared with operating income of $186 million for the third quarter of fiscal 2022.

•The effective income tax rate for the third quarter of fiscal 2023 was 12.8 percent compared with negative 67.9 percent for the third quarter of fiscal 2022.

•Net income for the third quarter of fiscal 2023 was $218 million compared with net income of $282 million for the third quarter of fiscal 2022.

•Diluted earnings per share was $0.58 for the third quarter of fiscal 2023 compared with diluted earnings per share of $0.77 for the third quarter of fiscal 2022.

•Merchandise inventory as of the third quarter of fiscal 2023 decreased 22 percent compared with the third quarter of fiscal 2022.

Effective August 22, 2023, Richard Dickson became the Company's President and Chief Executive Officer.

On April 25, 2023, the Company's management committed to the Plan as part of the Company's previously announced efforts to simplify and optimize its operating model and structure. The Plan includes a reduction in workforce of approximately 1,800 employees, primarily in headquarters locations. The actions associated with the reduction of the Company's workforce under the Plan have been substantially completed. In connection with the Plan, the Company incurred $5 million and $93 million in pre-tax restructuring costs during the 13 and 39 weeks ended October 28, 2023, respectively. Restructuring costs for the 13 weeks ended October 28, 2023 primarily included consulting and other associated costs. Restructuring costs for the 39 weeks ended October 28, 2023 included employee-related costs of $64 million and consulting and other associated costs of $29 million.

The Company is also continuing to reduce the number of Gap and Banana Republic stores in North America by approximately 350 stores from the beginning of fiscal 2020 to the end of fiscal 2023. As of October 28, 2023, we have closed, net of openings, 328 Gap and Banana Republic stores in North America since the beginning of fiscal 2020.

On November 7, 2022, we signed agreements to transition our Gap Greater China operations to a third party, Baozun, to operate Gap Greater China stores and the in-market website as a franchise partner, subject to regulatory approvals and closing conditions. On January 31, 2023, the Gap China transaction closed with Baozun. The impact upon divestiture was not material to our results of operations for the 39 weeks ended October 28, 2023. The Gap Taiwan operations will continue to operate as usual until regulatory approvals and closing conditions are met.

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We are focused on the following strategic priorities in the near term:

•managing inventory to facilitate margin recovery and optimizing our cost structure with operational and financial rigor;

•reinvigorating our brands to drive relevance and an engaging omni-channel experience;

•creating trend-right product assortments while driving creative excellence and delivering consistent product with storytelling that excites our customers;

•rationalizing the Gap and Banana Republic store fleet;

•attracting and retaining strong talent in our businesses and functions; and

•continuing to integrate social and environmental sustainability into business practices to support long-term growth.

19

RESULTS OF OPERATIONS

Net Sales

See Note 2 of Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q, for net sales disaggregation.

Comparable Sales ("Comp Sales")

Comp Sales include the results of Company-operated stores and sales through our online channel. The calculation of Comp Sales excludes the results of our franchise business. Comp Sales also included the results of certain foreign operations until their respective transitions to third party franchise partners. See Note 12 of Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q, for related disclosures.

A store is included in the Comp Sales calculations when it has been open and operated by the Company for at least one year and the selling square footage has not changed by 15 percent or more within the past year. A store is included in the Comp Sales calculations on the first day it has comparable prior year sales. Stores in which the selling square footage has changed by 15 percent or more as a result of a remodel, expansion, or reduction are excluded from the Comp Sales calculations until the first day they have comparable prior year sales.

A store is considered non-comparable ("Non-comp") when it has been open and operated by the Company for less than one year or has changed its selling square footage by 15 percent or more within the past year.

A store is considered "Closed" if it is temporarily closed for three or more full consecutive days or it is permanently closed. When a temporarily closed store reopens, the store will be placed in the Comp/Non-comp status it was in prior to its closure. If a store was in Closed status for three or more days in the prior year, the store will be in Non-comp status for the same days the following year.

Current year foreign exchange rates are applied to both current year and prior year Comp Sales to achieve a consistent basis for comparison.

The percentage change in Comp Sales by global brand and for The Gap, Inc., as compared with the preceding year, is as follows:

	13 Weeks Ended				39 Weeks Ended
	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Old Navy Global	1	%	(1)	%	(2)	%	(13)	%
Gap Global	(1)	%	4	%	—	%	(4)	%
Banana Republic Global	(8)	%	10	%	(8)	%	14	%
Athleta Global	(19)	%	—	%	(13)	%	(5)	%
The Gap, Inc.	(2)	%	1	%	(3)	%	(8)	%

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Store count, openings, closings, and square footage for our stores are as follows:

	January 28, 2023	39 Weeks Ended October 28, 2023		October 28, 2023
	Number of Store Locations	Number of Stores Opened	Number of Stores Closed	Number of Store Locations		Square Footage (in millions)
Old Navy North America	1,238	24	11	1,251		19.9
Gap North America	493	1	14	480		5.1
Gap Asia (1)	232	1	7	137		1.2
Banana Republic North America	419	2	13	408		3.4
Banana Republic Asia	46	4	2	48		0.2
Athleta North America	257	24	7	274		1.1
Company-operated stores total	2,685	56	54	2,598		30.9
Franchise (1)	667	219	85	935		N/A
Total	3,352	275	139	3,533		30.9
Increase (decrease) over prior year				4.5	%	(4.6)	%
	January 29, 2022	39 Weeks Ended October 29, 2022		October 29, 2022
	Number of Store Locations	Number of Stores Opened	Number of Stores Closed	Number of Store Locations		Square Footage (in millions)
Old Navy North America (2)	1,252	25	6	1,247		20.0
Gap North America	520	2	18	504		5.4
Gap Asia	329	4	74	259		2.2
Gap Europe (3)	11	—	—	—		—
Banana Republic North America	446	2	15	433		3.6
Banana Republic Asia	50	2	3	49		0.2
Athleta North America	227	29	5	251		1.0
Company-operated stores total	2,835	64	121	2,743		32.4
Franchise (2) (3)	564	77	39	637		N/A
Total	3,399	141	160	3,380		32.4
Decrease over prior year				(2.3)	%	(3.9)	%

__________

(1)The 89 Gap China stores that were transitioned to Baozun during the period are not included as store closures or openings for Company-operated and Franchise store activity. The ending balance for Gap Asia excludes Gap China stores and the ending balance for Franchise includes Gap China locations transitioned during the period.

(2)The 24 Old Navy Mexico stores that were transitioned to Grupo Axo during the period are not included as store closures or openings for Company-operated and Franchise store activity. The ending balance for Old Navy North America excludes Old Navy Mexico stores and the ending balance for Franchise includes Old Navy Mexico stores.

(3)The 11 Gap Italy stores that were transitioned to OVS during the period are not included as store closures or openings for Company-operated and Franchise store activity. The ending balance for Gap Europe excludes Gap Italy stores and the ending balance for Franchise includes Gap Italy stores.

Outlet and factory stores are reflected in each of the respective brands.

21

Net Sales

Our net sales decreased $272 million, or 7 percent, during the third quarter of fiscal 2023 compared with the third quarter of fiscal 2022, and decreased $782 million, or 7 percent, during the first three quarters of fiscal 2023 compared with the first three quarters of fiscal 2022. This was driven primarily by a decrease in Comp Sales, the transition of our Gap China business to a partnership model, and other strategic store closures. Additionally, there was an unfavorable impact of foreign exchange for the first three quarters of fiscal 2023 of $67 million. The foreign exchange impact is the translation impact if net sales for the prior year period were translated at exchange rates applicable during the current year period.

Cost of Goods Sold and Occupancy Expenses

	13 Weeks Ended						39 Weeks Ended
($ in millions)	October 28, 2023			October 29, 2022			October 28, 2023			October 29, 2022
Cost of goods sold and occupancy expenses	$	2,211		$	2,530		$	6,488		$	7,438
Gross profit	$	1,556		$	1,509		$	4,103		$	3,935
Cost of goods sold and occupancy expenses as a percentage of net sales	58.7		%	62.6		%	61.3		%	65.4		%
Gross margin	41.3		%	37.4		%	38.7		%	34.6		%

Cost of goods sold and occupancy expenses decreased 3.9 percentage points as a percentage of net sales in the third quarter of fiscal 2023 compared with the third quarter of fiscal 2022.

•Cost of goods sold decreased 4.6 percentage points as a percentage of net sales in the third quarter of fiscal 2023 compared with the third quarter of fiscal 2022, primarily driven by lower commodity costs and air freight expenses, as well as improved promotional activity. Additionally, there was inventory impairment that occurred during the third quarter of fiscal 2022 as a result of the decision to discontinue the Yeezy Gap business.

•Occupancy expenses increased 0.7 percentage points as a percentage of net sales in the third quarter of fiscal 2023 compared with the third quarter of fiscal 2022, primarily driven by a decrease in net sales without a corresponding decrease in fixed occupancy expenses.

Cost of goods sold and occupancy expenses decreased 4.1 percentage points as a percentage of net sales in the first three quarters of fiscal 2023 compared with the first three quarters of fiscal 2022.

•Cost of goods sold decreased 4.8 percentage points as a percentage of net sales in the first three quarters of fiscal 2023 compared with the first three quarters of fiscal 2022, primarily driven by a decrease in air freight expenses and improved promotional activity. Additionally, there was inventory impairment that occurred during the first three quarters of fiscal 2022 as a result of delayed seasonal product due to global supply chain disruption and extended size product discontinued at stores, and the decision to discontinue the Yeezy Gap business. This was partially offset by commodity price increases in the first half of fiscal 2023.

•Occupancy expenses increased 0.7 percentage points as a percentage of net sales in the first three quarters of fiscal 2023 compared with the first three quarters of fiscal 2022, primarily driven by a decrease in Comp Sales without a corresponding decrease in fixed occupancy expenses.

Operating Expenses

	13 Weeks Ended						39 Weeks Ended
($ in millions)	October 28, 2023			October 29, 2022			October 28, 2023			October 29, 2022
Operating expenses	$	1,306		$	1,323		$	3,757		$	3,974
Operating expenses as a percentage of net sales	34.7		%	32.8		%	35.5		%	34.9		%
Operating margin	6.6		%	4.6		%	3.3		%	(0.3)		%

Operating expenses decreased $17 million, but increased 1.9 percentage points as a percentage of net sales during the third quarter of fiscal 2023 compared with the third quarter of fiscal 2022, primarily due to a decrease in net sales as well as the following:

•a decrease in payroll expenses primarily due to operating model and structure changes partially offset by higher performance-based compensation; and

•a decrease in advertising expenses; partially offset by

•a gain of $83 million on sale of building during the third quarter of fiscal 2022.

22

Operating expenses decreased $217 million, but increased 0.6 percentage points as a percentage of net sales during the first three quarters of fiscal 2023 compared with the first three quarters of fiscal 2022, primarily due to a decrease in net sales as well as the following:

•a decrease in advertising expenses;

•a decrease in technology-related investments;

•a gain on sale of building of $47 million that occurred during the first quarter of fiscal 2023;

•a decrease in payroll expenses primarily due to operating model and structure changes partially offset by higher performance-based compensation; and

•a loss on divestiture activity of $35 million that occurred during the second quarter of fiscal 2022 related to the transition of the Old Navy Mexico business; partially offset by

•restructuring expenses of $89 million incurred during the first three quarters of fiscal 2023 as a result of actions taken to simplify and optimize our operating model and structure; and

•a gain on sale of building of $83 million that occurred during the third quarter of fiscal 2022.

Interest Expense

	13 Weeks Ended				39 Weeks Ended
($ in millions)	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Interest expense	$	28	$	22	$	66	$	63

Interest expense primarily includes interest on outstanding borrowings and obligations mainly related to our Senior Notes.

Interest Income

	13 Weeks Ended				39 Weeks Ended
($ in millions)	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Interest income	$	(28)	$	(4)	$	(58)	$	(6)

Interest income increased $24 million during the third quarter of fiscal 2023 compared with the third quarter of fiscal 2022 and increased $52 million during the first three quarters of fiscal 2023 compared with the first three quarters of fiscal 2022 primarily due to higher cash balances and higher interest rates, as well as tax-related interest income.

Income Taxes

	13 Weeks Ended						39 Weeks Ended
($ in millions)	October 28, 2023			October 29, 2022			October 28, 2023			October 29, 2022
Income taxes	$	32		$	(114)		$	21		$	(167)
Effective tax rate	12.8		%	(67.9)		%	6.2		%	174.0		%

The change in the effective tax rate for the third quarter of fiscal 2023 compared with the third quarter of fiscal 2022 is primarily due to changes in the amount and jurisdictional mix of pre-tax earnings, the cumulative impact of a change in the Company's estimated annual effective tax rate recognized in the prior year, and a current year tax benefit from the impact of foreign valuation allowances.

The change in the effective tax rate for the first three quarters of fiscal 2023 compared with the first three quarters of fiscal 2022 is primarily due to changes in the amount and jurisdictional mix of pre-tax earnings, the cumulative impact of a change in the Company's estimated annual effective tax rate recognized in the prior year, and current year tax benefits from the impact of valuation allowances and a U.S. transfer pricing settlement related to our sourcing activities.

23

LIQUIDITY AND CAPITAL RESOURCES

In addition to our cash flows from operating activities, our primary sources of liquidity include cash and cash equivalents, our Senior Notes, and our ABL Facility. As of October 28, 2023, we had cash and cash equivalents of approximately $1.4 billion. We hold our cash and cash equivalents across a diversified set of reputable financial institutions and monitor the credit standing of those financial institutions. In addition, we have issued $1.5 billion aggregate principal amount of our Senior Notes, and are also able to supplement near-term liquidity, if necessary, with our ABL Facility or other available market instruments. There were no borrowings under the ABL Facility as of October 28, 2023. See Note 5 of Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q, for disclosures on the Senior Notes and ABL Facility.

Our largest source of operating cash flows is cash collections from the sale of our merchandise. Our primary uses of cash include merchandise inventory purchases, lease and occupancy costs, personnel-related expenses, purchases of property and equipment, shipping costs, and payment of taxes. As our business typically follows a seasonal pattern, with sales peaking during the end-of-year holiday period, we fund inventory expenditures during normal and peak periods through cash flows from operating activities and available cash. The seasonality of our operations, in addition to the impact of global economic conditions such as the uncertainty surrounding global inflationary pressures, acts of terrorism or war, global credit and banking markets, and new legislation, may lead to significant fluctuations in certain asset and liability accounts as well as cash inflows and outflows between fiscal year-end and subsequent interim periods.

Our voluntary SCF program provides certain suppliers with the opportunity to sell their receivables due from us to participating financial institutions at the sole discretion of both the suppliers and the financial institutions. We are not a party to the agreements between our suppliers and the financial institutions and our payment terms are not impacted by whether a supplier participates in the SCF program. See Note 13 of Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q, for disclosures on the Company's SCF program.

We believe our existing balances of cash and cash equivalents, along with our cash flows from operations, and instruments mentioned above, provide sufficient funds for our business operations as well as capital expenditures, dividends, and other liquidity requirements associated with our business operations over the next 12 months and beyond.

Cash Flows from Operating Activities

Net cash provided by operating activities was $832 million during the first three quarters of fiscal 2023 compared with $112 million of net cash used for operating activities during the first three quarters of fiscal 2022, primarily due to the following:

    Net Income

•an increase in net income;

Changes in operating assets and liabilities

•an increase of $636 million related to accounts payable primarily due to the timing of payments for inventory during the first three quarters of fiscal 2023 compared with the first three quarters of fiscal 2022; and

•an increase of $112 million related to accrued expenses and other current liabilities primarily due to lower bonus payments during the first three quarters of fiscal 2023 compared with the first three quarters of fiscal 2022; partially offset by

•a decrease of $166 million related to income taxes payable, net of receivables and other tax-related items, primarily due to receipt of tax refunds during the first three quarters of fiscal 2022 related to fiscal 2020 net operating loss carryback claims.

Cash Flows from Investing Activities

Net cash used for investing activities increased $84 million during the first three quarters of fiscal 2023 compared with the first three quarters of fiscal 2022, primarily due to the following:

•$76 million in net proceeds from the sale of a building during the first three quarters of fiscal 2023 compared with $458 million in net proceeds from the sale of buildings during the first three quarters of fiscal 2022; partially offset by

•$289 million less purchases of property and equipment during the first three quarters of fiscal 2023 compared with the first three quarters of fiscal 2022, largely due to rationalizing our technology investments.

24

Cash Flows from Financing Activities

Net cash used for financing activities was $516 million during the first three quarters of fiscal 2023 compared with $60 million of net cash provided by financing activities during the first three quarters of fiscal 2022, primarily due to the following:

•$350 million from the ABL Facility that was borrowed during the first three quarters of fiscal 2022 and repaid during the first three quarters of fiscal 2023; partially offset by

•$123 million in repurchases of common stock during the first three quarters of fiscal 2022 compared with no repurchases during the first three quarters of fiscal 2023.

Free Cash Flow

Free cash flow is a non-GAAP financial measure. We believe free cash flow is an important metric because it represents a measure of how much cash a company has available for discretionary and non-discretionary items after the deduction of capital expenditures. We require regular capital expenditures including technology improvements as well as building and maintaining our stores and distribution centers. We use this metric internally, as we believe our sustained ability to generate free cash flow is an important driver of value creation. However, this non-GAAP financial measure is not intended to supersede or replace our GAAP results.

The following table reconciles free cash flow, a non-GAAP financial measure, from a GAAP financial measure.

	39 Weeks Ended
($ in millions)	October 28, 2023		October 29, 2022
Net cash provided by (used for) operating activities	$	832	$	(112)
Less: Purchases of property and equipment	(288)		(577)
Free cash flow	$	544	$	(689)

Dividend Policy

In determining whether and at what level to declare a dividend, we consider a number of factors including sustainability, operating performance, liquidity, and market conditions.

We paid a dividend of $0.15 per share during the third quarter of fiscal 2023. In November 2023, the Board authorized a dividend of $0.15 per share for the fourth quarter of fiscal 2023.

Share Repurchases

Certain financial information about the Company’s share repurchases is set forth in Note 8 of Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

Summary Disclosures about Contractual Cash Obligations and Commercial Commitments

There have been no material changes to our contractual obligations and commercial commitments as disclosed in our Annual Report on Form 10-K as of January 28, 2023, other than those which occur in the normal course of business. See Note 10 of Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q, for disclosures on commitments and contingencies.

Critical Accounting Policies and Estimates

There have been no significant changes to our critical accounting policies and estimates as discussed in our Annual Report on Form 10-K for the fiscal year ended January 28, 2023. See Note 1 of Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q, for disclosures on accounting policies.

Item 3.     Quantitative and Qualitative Disclosures About Market Risk.

Our market risk profile as of January 28, 2023 is disclosed in our Annual Report on Form 10-K and has not significantly changed other than as noted below. See Notes 5, 6, and 7 of Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q, for disclosures on our debt and credit facilities, investments, and derivative financial instruments.

On March 27, 2023, Moody's downgraded our corporate credit rating from Ba2 to Ba3 with a negative outlook and downgraded the rating of our Senior Notes from Ba3 to B1 with a negative outlook. These reductions and any future reduction in our credit ratings could result in an increase to our interest expense on future borrowings.

25

Item 4.     Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting

There was no change in the Company’s internal control over financial reporting that occurred during the Company’s third quarter of fiscal 2023 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company reviews its internal control over financial reporting following major organizational restructuring. The impact of the Plan on the Company's internal control over financial reporting has been assessed and will continue to be monitored throughout the fiscal year. See Note 3 of Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q, for disclosures on the Plan.

26

PART II – OTHER INFORMATION

Item 1.     Legal Proceedings.

As a multinational company, we are subject to various proceedings, lawsuits, disputes, and claims ("Actions") arising in the ordinary course of our business. Many of these Actions raise complex factual and legal issues and are subject to uncertainties. Actions filed against us from time to time include commercial, intellectual property, customer, employment, securities, and data privacy claims, including class action lawsuits. The plaintiffs in some Actions seek unspecified damages or injunctive relief, or both. Actions are in various procedural stages, and some are covered in part by insurance.

We cannot predict with assurance the outcome of Actions brought against us. Accordingly, developments, settlements, or resolutions may occur and impact operations in the quarter of such development, settlement, or resolution. However, we do not believe that the outcome of any current Action would have a material effect on our financial results.

Item 1A.     Risk Factors.

There have been no material changes in our risk factors from those disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended January 28, 2023, other than as updated in Part II, Item 1A of our Quarterly Report on Form 10-Q for the fiscal quarter ended April 29, 2023.

Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds.

In February 2019, the Board approved a $1.0 billion share repurchase authorization, which has no expiration date. There were no shares repurchased, other than shares withheld to settle employee statutory tax withholding related to the vesting of stock units, during the 13 weeks ended October 28, 2023. The February 2019 repurchase program had $476 million remaining as of October 28, 2023.

Item 5.     Other Information

During the 13 weeks ended October 28, 2023, none of our directors or Section 16 officers adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as those terms are defined in Item 408(a) of Regulation S-K, except as follows:

On August 29, 2023, Julie Gruber, Chief Legal and Compliance Officer and Corporate Secretary, adopted a trading plan intended to satisfy the affirmative defense of Rule 10b5-1(c) to sell up to 417,892 shares of Gap Inc. common stock. Unless otherwise terminated pursuant to its terms, the plan will terminate on March 14, 2025 or when all shares under the plan are sold.

On August 28, 2023, Katrina O’Connell, Chief Financial Officer, adopted a trading plan intended to satisfy the affirmative defense of Rule 10b5-1(c) to sell up to 471,700 shares of Gap Inc. common stock. Unless otherwise terminated pursuant to its terms, the plan will terminate on August 28, 2024 or when all shares under the plan are sold.

27

Item 6.     Exhibits.

		Incorporated by Reference
Exhibit No.	Exhibit Description	Form	File No.	Exhibit	Filing Date	Filed/ Furnished Herewith
3.1	Amended and Restated Certificate of Incorporation (P)	10-K	1-7562	3.1	April 26, 1993
3.2	Certificate of Amendment of Amended and Restated Certificate of Incorporation	10-K	1-7562	3.2	April 4, 2000
3.3	Amended and Restated Bylaws (effective August 15, 2022)	10-Q	1-7562	3.3	August 26, 2022
10.1†	Amendment, dated August 17, 2023, to Letter Agreement dated August 1, 2022 by and between Bob L. Martin and the Registrant					X
31.1	Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer of The Gap, Inc. (Section 302 of the Sarbanes-Oxley Act of 2002)					X
31.2	Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer of The Gap, Inc. (Section 302 of the Sarbanes-Oxley Act of 2002)					X
32.1	Certification of the Chief Executive Officer of The Gap, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					X
32.2	Certification of the Chief Financial Officer of The Gap, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					X
101	The following materials from The Gap, Inc.’s Quarterly Report on Form 10-Q for the quarter ended October 28, 2023, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Stockholders' Equity; (v) the Condensed Consolidated Statements of Cash Flows; and (vi) Notes to Condensed Consolidated Financial Statements					X
104	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)					X

_____________________________

(P)    This Exhibit was originally filed in paper format. Accordingly, a hyperlink has not been provided.

† Indicates management contract or compensatory plan or arrangement.

28

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		THE GAP, INC.
Date:	November 21, 2023	By	/s/ Richard Dickson
			Richard Dickson
			President and Chief Executive Officer
			(Principal Executive Officer)
Date:	November 21, 2023	By	/s/ Katrina O'Connell
			Katrina O'Connell
			Executive Vice President and Chief Financial Officer
			(Principal Financial and Accounting Officer)

29