The company primarily operated in North America. The company recorded revenues of $16.023 billion
during the fiscal year ended January 2006, a decrease of 1.5% over 2005. The operating
profit of the company was $1.79 billion during fiscal year 2006, a decrease of
4.2% over 2005. The net profit was $1.113 billion, a decrease of 3.2% over 2005. Gap
was ranked 52nd (2005 ranking—40th) by the Business Week Interbrand survey conducted
in August 2006. It was valued at $6416 million ($8195 million in 2005). (See Exhibits 1
and 2 for Gap’s financial results.)
Paul Pressler (Pressler), who became Gap Inc.’s CEO in October 2002, had been heralded
for his cost-cutting strategies that had restored financial discipline in the company. But there
was a trade-off, analysts said. Pressler, who had little retail experience, did not steer Gap toward
its customers’ tastes. Realizing his mistakes, Pressler changed his strategy in mid-2004
to generate growth. Would he succeed in rejuvenating Gap Inc. and attracting customers once
again?