Segment Information

3 Months Ended

Apr. 28, 2012

Segment Information [Abstract]

Segment Information

Note 11. 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) 13 Weeks Ended April 28, 2012	Gap			Old Navy			Banana Republic			Franchise (3)			Piperlime and Athleta			Total (4)			Percentage of Net Sales
U.S. (1)	$	757		$	1,136		$	484		$	—		$	—		$	2,377			68	%
Canada		73			83			45			—			—			201			6
Europe		153			—			15			18			—			186			5
Asia		223			—			30			20			—			273			8
Other regions		—			—			—			40			—			40			1
Total Stores reportable segment		1,206			1,219			574			78			—			3,077			88
Direct reportable segment (2)		110			163			48			—			89			410			12
Total	$	1,316		$	1,382		$	622		$	78		$	89		$	3,487			100	%
Sales growth		4	%		4	%		7	%		30	%		25	%		6	%
($ in millions) 13 Weeks Ended April 30, 2011	Gap			Old Navy			Banana Republic			Franchise (3)			Piperlime and Athleta			Total (4)			Percentage of Net Sales
U.S. (1)	$	743		$	1,097		$	460		$	—		$	—		$	2,300			70	%
Canada		70			88			43			—			—			201			6
Europe		161			—			11			15			—			187			5
Asia		190			—			24			16			—			230			7
Other regions		—			—			—			29			—			29			1
Total Stores reportable segment		1,164			1,185			538			60			—			2,947			89
Direct reportable segment (2)		96			140			41			—			71			348			11
Total	$	1,260		$	1,325		$	579		$	60		$	71		$	3,295			100	%
Sales growth (decline)		(1	)%		(4	)%		1	%		43	%		18	%		(1	)%

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

(2) Online sales shipped from distribution centers located outside the U.S. were $34 million ($22 million for Canada and $12 million for Europe) and $26 million ($18 million for Canada and $8 million for Europe) for the thirteen weeks ended April 28, 2012 and April 30, 2011, respectively.

(3) Franchise sales were $78 million ($69 million for Gap and $9 million for Banana Republic) and $60 million ($53 million for Gap and $7 million for Banana Republic) for the thirteen weeks ended April 28, 2012 and April 30, 2011, respectively.

(4) Net sales outside of the U.S. and Canada (including Direct and franchise) were $511 million and $454 million for the thirteen weeks ended April 28, 2012 and April 30, 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 the 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
($ in millions)	April 28, 2012		April 30, 2011
Operating income:
Stores	$	298	$	304
Direct		97		82
Operating income	$	395	$	386

($ in millions)	April 28, 2012		January 28, 2012		April 30, 2011
Segment assets:
Stores	$	3,304	$	3,315	$	3,402
Direct		597		591		537
Unallocated		3,671		3,516		4,088
Total assets	$	7,572	$	7,422	$	8,027

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
($ in millions)	April 28, 2012		April 30, 2011
U.S. (1)	$	2,753	$	2,622
Canada		223		219
Total North America		2,976		2,841
Other foreign		511		454
Total net sales	$	3,487	$	3,295

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