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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 May 1, 2021
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: (415427-0100

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.05 par valueGPSThe 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, 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 filerAccelerated 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 May 21, 2021 was 377,602,302.



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 COVID-19 on the assumptions and estimates used when preparing the quarterly financial statements, and on our results of operations, financial position, and liquidity;
the impact of recent accounting pronouncements;
recognition of revenue deferrals as revenue;
our new credit card program with Barclays and Mastercard, as well as our previous program with Synchrony Financial;
compliance with applicable covenants under the Notes and the ABL Facility (each as defined below);
unrealized gains and losses from designated cash flow hedges;
future share repurchases, including the potential timing and amounts thereof;
the impact of losses due to indemnification obligations;
the outcome of proceedings, lawsuits, disputes, and claims, including the impact of such actions on our financial results;
our Power Plan 2023 strategy and our ability to execute against it;
our omni-channel capabilities;
our key initiatives and business priorities;
our Gap Home venture with Walmart.com and other existing and potential future partnerships;
the impact of COVID-related store closures and supply chain challenges;
product acceptance by our customers;
our investments in demand generation;
targeted closures of North American stores, including the number and timing thereof and costs associated therewith;
the impact of our expected lease buyouts amounts;
our ability to reach agreements with our landlords regarding suspended rent payments for our temporarily closed stores;
the expected timing, cost and scope of the strategic review of our operating model in Europe;
the impact of the divestiture of the Janie & Jack and Intermix businesses;
our loyalty programs;
creating product that offers value to our customers through a combination of fit, quality, brand and price;
investing in our four purpose-led lifestyle brands to drive relevance and gain market share;
growing our online business;
attracting and retaining strong talent in our businesses and functions;
reducing our fixed cost structure to fuel demand generation investments;
leveraging our scale to navigate constraints in supply chain;
managing inventory to support a healthy merchandise margin;
rationalizing the Gap and Banana Republic brands;
prioritizing asset-light growth through licensing, online, and franchise partnerships globally;
continuing to integrate social and environmental sustainability into business practices;
our ability to respond to developments in the COVID-19 pandemic situation and guidance from international and domestic authorities;
our ability to manage through the impacts of COVID-19, including the impact it has on our liquidity;
our ability to supplement near-term liquidity, if necessary, with the ABL Facility or other available market instruments;
cash flows from our operations, along with current cash balances, and the Notes and the ABL Facility being sufficient to support our business operations;
the impact of seasonality and COVID-19 recovery on our operations;
our dividend policy, including the potential timing and amounts of future dividends; and



the impact of changes in 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 environment and risks associated with the COVID-19 pandemic;
the risk that we or our franchisees will be unsuccessful in gauging apparel trends and changing consumer preferences;
the risk that failure to maintain, enhance and protect our brand image could have an adverse effect on our results of operations;
the highly competitive nature of our business in the United States and internationally;
engaging in or seeking to engage in strategic transactions that are subject to various risks and uncertainties;
the risk that our investments in customer, digital, and omni-channel shopping initiatives may not deliver the results we anticipate;
the risk that the failure to manage key executive succession and retention and to continue to attract qualified personnel could have an adverse impact on our results of operations;
the risk that if we are unable to manage our inventory effectively, our gross margins will be adversely affected;
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 we are subject to data or other security breaches that may result in increased costs, violations of law, significant legal and financial exposure, and a loss of confidence in our security measures, which could have an adverse effect on our results of operations and our reputation;
the risk that a failure of, or updates or changes to, our information technology systems may disrupt our operations;
the risks to our efforts to expand internationally, including our ability to operate in regions where we have less experience;
the risk that we or our franchisees will be unsuccessful in identifying, negotiating, and securing new store locations and renewing, modifying, or terminating leases for existing store locations effectively;
the risk that our franchisees’ operation of franchise stores is not directly within our control and could impair the value of our brands;
the risk that trade matters could increase the cost or reduce the supply of apparel available to us and adversely affect our business, financial condition, and results of operations;
the risk that foreign currency exchange rate fluctuations could adversely impact our financial results;
the risk that comparable sales and margins will experience fluctuations;
the risk that natural disasters, public health crises (similar to and including the ongoing COVID-19 pandemic), political crises, negative global climate patterns, or other catastrophic events could adversely affect our operations and financial results, or those of our franchisees or vendors;
the risk that changes in global economic conditions or consumer spending patterns could adversely impact our results of operations;
the risk that we will not be successful in defending various proceedings, lawsuits, disputes, and claims;
the risk that changes in the regulatory or administrative landscape could adversely affect our financial condition and results of operations;
the risk that reductions in income and cash flow from our credit card arrangement related to our private label and co-branded credit cards could adversely affect our operating results and cash flows;
the risk that changes in our credit profile or deterioration in market conditions may limit our access to the capital markets and adversely impact our financial position or our business initiatives;
the risk that the adoption of new accounting pronouncements will impact future results; and
the risk that we do not repurchase some or all of the shares we anticipate purchasing pursuant to our repurchase program.
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 30, 2021 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 May 28, 2021. 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 30, 2021.



THE GAP, INC.
TABLE OF CONTENTS
 
 Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 6.



PART I – FINANCIAL INFORMATION
Item 1.     Financial Statements.
THE GAP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
($ and shares in millions except par value)May 1,
2021
January 30,
2021
May 2,
2020
ASSETS
Current assets:
Cash and cash equivalents$2,066 $1,988 $1,028 
Short-term investments475 410 51 
Merchandise inventory2,370 2,451 2,217 
Other current assets1,091 1,159 920 
Total current assets6,002 6,008 4,216 
Property and equipment, net of accumulated depreciation of $5,616, $5,608 and $5,886
2,839 2,841 2,945 
Operating lease assets4,060 4,217 4,851 
Other long-term assets703 703 698 
Total assets$13,604 $13,769 $12,710 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Revolving credit facility$ $ $500 
Accounts payable1,530 1,743 971 
Accrued expenses and other current liabilities1,294 1,276 1,051 
Current portion of operating lease liabilities798 831 886 
Income taxes payable16 34 23 
Total current liabilities3,638 3,884 3,431 
Long-term liabilities:
Long-term debt2,218 2,216 1,250 
Long-term operating lease liabilities4,449 4,617 5,331 
Other long-term liabilities 493 438 381 
Total long-term liabilities7,160 7,271 6,962 
Commitments and contingencies (see Note 9)
Stockholders’ equity:
Common stock $0.05 par value
Authorized 2,300 shares for all periods presented; Issued and Outstanding 377, 374, and 373 shares
19 19 19 
Additional paid-in capital118 85 17 
Retained earnings2,667 2,501 2,235 
Accumulated other comprehensive income 2 9 46 
Total stockholders’ equity2,806 2,614 2,317 
Total liabilities and stockholders’ equity$13,604 $13,769 $12,710 
See Accompanying Notes to Condensed Consolidated Financial Statements
1


THE GAP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
 13 Weeks Ended
($ and shares in millions except per share amounts)May 1,
2021
May 2,
2020
Net sales$3,991 $2,107 
Cost of goods sold and occupancy expenses2,361 1,839 
Gross profit1,630 268 
Operating expenses1,390 1,512 
Operating income (loss)240 (1,244)
Interest expense54 19 
Interest income(1)(4)
Income (loss) before income taxes187 (1,259)
Income taxes21 (327)
Net income (loss)$166 $(932)
Weighted-average number of shares - basic376 372 
Weighted-average number of shares - diluted385 372 
Earnings (loss) per share - basic$0.44 $(2.51)
Earnings (loss) per share - diluted$0.43 $(2.51)
See Accompanying Notes to Condensed Consolidated Financial Statements
2


THE GAP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
 
 13 Weeks Ended
($ in millions)May 1,
2021
May 2,
2020
Net income (loss)$166 $(932)
Other comprehensive income (loss), net of tax
Foreign currency translation(3)(9)
Change in fair value of derivative financial instruments, net of tax of $ and $2
(7)19 
Reclassification adjustment for losses (gains) on derivative financial instruments, net of tax of $ and $
3 (4)
Other comprehensive income (loss), net of tax(7)6 
Comprehensive income (loss)$159 $(926)
See Accompanying Notes to Condensed Consolidated Financial Statements
3


THE GAP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
 Common StockAdditional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income
 
($ and shares in millions except per share amounts)SharesAmountTotal
Balance as of January 30, 2021374 $19 $85 $2,501 $9 $2,614 
Net income for the thirteen weeks ended May 1, 2021166 166 
Other comprehensive income (loss), net of tax
Foreign currency translation (3)(3)
Change in fair value of derivative financial instruments(7)(7)
Amounts reclassified from accumulated other comprehensive income3 3 
Issuance of common stock related to stock options and employee stock purchase plans1  25 25 
Issuance of common stock and withholding tax payments related to vesting of stock units2  (32)(32)
Share-based compensation, net of forfeitures40 40 
Balance as of May 1, 2021377 $19 $118 $2,667 $2 $2,806 
Balance as of February 1, 2020371 $19 $ $3,257 $40 $3,316 
Net loss for the thirteen weeks ended May 2, 2020(932)(932)
Other comprehensive income (loss), net of tax
Foreign currency translation (9)(9)
Change in fair value of derivative financial instruments19 19 
Amounts reclassified from accumulated other comprehensive income(4)(4)
Issuance of common stock related to stock options and employee stock purchase plans1  6 6 
Issuance of common stock and withholding tax payments related to vesting of stock units1  (7)(7)
Share-based compensation, net of forfeitures18 18 
Common stock dividends declared ($0.2425 per share) (1)
(90)(90)
Balance as of May 2, 2020373 $19 $17 $2,235 $46 $2,317 
__________
(1) On March 4, 2020, the Company declared a first quarter fiscal year 2020 dividend of $0.2425 per share. The dividend payable amount for the first quarter of fiscal 2020 was estimated based upon the shareholders of record as of May 2, 2020. The dividend was paid during the first quarter of fiscal 2021 to shareholders of record at the close of business on April 7, 2021.
See Accompanying Notes to Condensed Consolidated Financial Statements
4


THE GAP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 13 Weeks Ended
($ in millions)May 1,
2021
May 2,
2020
Cash flows from operating activities:
Net income (loss)$166 $(932)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization120 130 
Share-based compensation36 18 
Impairment of operating lease assets5 360 
Impairment of store assets 124 
Amortization of debt issuance costs4  
Non-cash and other items13 3 
Loss on divestiture activity56  
Deferred income taxes18 (41)
Changes in operating assets and liabilities:
Merchandise inventory69 (79)
Other current assets and other long-term assets10 126 
Accounts payable(205)(203)
Accrued expenses and other current liabilities40 (86)
Income taxes payable, net of receivables and other tax-related items(18)(322)
Other long-term liabilities41 (18)
Operating lease assets and liabilities, net(15)(20)
Net cash provided by (used for) operating activities340 (940)
Cash flows from investing activities:
Purchases of property and equipment(124)(122)
Proceeds from divestiture activity28  
Purchases of short-term investments(298)(59)
Proceeds from sales and maturities of short-term investments233 297 
Net cash provided by (used for) investing activities(161)116 
Cash flows from financing activities:
Proceeds from revolving credit facility 500 
Proceeds from issuances under share-based compensation plans25 6 
Withholding tax payments related to vesting of stock units(32)(7)
Cash dividends paid(91) 
Net cash provided by (used for) financing activities(98)499 
Effect of foreign exchange rate fluctuations on cash, cash equivalents, and restricted cash(1)(8)
Net increase (decrease) in cash, cash equivalents, and restricted cash80 (333)
Cash, cash equivalents, and restricted cash at beginning of period2,016 1,381 
Cash, cash equivalents, and restricted cash at end of period$2,096 $1,048 
Supplemental disclosure of cash flow information:
Cash paid for interest during the period$2 $38 
Cash paid for income taxes during the period, net of refunds$20 $37 
See Accompanying Notes to Condensed Consolidated Financial Statements
5


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 (loss), stockholders' equity, and cash flows as of May 1, 2021 and May 2, 2020 and for all periods presented. The Condensed Consolidated Balance Sheet as of January 30, 2021 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 30, 2021.
The results of operations for the thirteen weeks ended May 1, 2021 are not necessarily indicative of the operating results that may be expected for the 52-week period ending January 29, 2022.
COVID-19
In March 2020, the World Health Organization declared the coronavirus disease ("COVID-19") a global pandemic and recommended containment and mitigation measures worldwide. Fiscal 2020 results were significantly impacted as we temporarily closed our North America retail stores and a large number of our stores globally. During the thirteen weeks ending May 1, 2021, there continued to be residual impacts from store closures in international markets and in our supply chain as a result of COVID-19. We continue to consider the impact of COVID-19 on the assumptions and estimates used when preparing these quarterly financial statements.
Restricted Cash
As of May 1, 2021, restricted cash primarily included consideration that serves as collateral for our insurance obligations. 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)May 1,
2021
January 30,
2021
May 2,
2020
Cash and cash equivalents, per Condensed Consolidated Balance Sheets$2,066 $1,988 $1,028 
Restricted cash included in other current assets 4  
Restricted cash included in other long-term assets30 24 20 
Total cash, cash equivalents, and restricted cash, per Condensed Consolidated Statements of Cash Flows$2,096 $2,016 $1,048 
Accounting Pronouncements Recently Adopted
In April 2020, the Financial Accounting Standards Board ("FASB") provided guidance on accounting for rent concessions resulting from the COVID-19 pandemic. We considered the FASB's guidance regarding lease modifications as a result of the effects of COVID-19 and elected to apply the temporary practical expedient to account for lease changes as variable rent unless an amendment results in a substantial change in the Company's lease obligations. The impact of applying the temporary practical expedient was not material to our Condensed Consolidated Financial Statements for the thirteen weeks ending May 1, 2021.
ASU No. 2019-12, Simplifying the Accounting for Income Taxes
In December 2019, the FASB issued accounting standards update ("ASU") No. 2019-12, Simplifying the Accounting for Income Taxes. The ASU is intended to enhance and simplify aspects of the income tax accounting guidance in Accounting Standards Codification Topic 740 as part of the FASB's simplification initiative. This guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2020 with early adoption permitted. The Company adopted this ASU on January 31, 2021 on a prospective basis and the adoption of this standard did not have a material impact on our Condensed Consolidated Financial Statements.
Accounting Pronouncements Not Yet Adopted
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, based on current information.
Note 2. Revenue
Disaggregation of Net Sales
We disaggregate our net sales between stores and online 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. The COVID-19 pandemic and resulting temporary closure of our stores negatively affected our net sales for the first quarter of fiscal 2020.
Net sales disaggregated for stores and online sales are as follows:
13 Weeks Ended
($ in millions)May 1, 2021May 2, 2020
Store sales (1)$2,384 $1,108 
Online sales (2)1,607 999 
Total net sales$3,991 $2,107 
__________
(1)Store sales primarily include sales made at our Company-operated stores and franchise sales.
(2)Online sales primarily include sales originating from our online channel including those that are picked up or shipped from stores. Additionally, sales from the business-to-business program are also included during the thirteen weeks ended May 1, 2021.

Net sales disaggregated by brand and region are as follows:
6


($ in millions)Old Navy GlobalGap GlobalBanana Republic GlobalAthleta (2)Other (3)Total
13 Weeks Ended May 1, 2021
U.S. (1)$2,099 $556 $333 $347 $89 $3,424 
Canada159 68 34   261 
Europe 69 3   72 
Asia1 163 16   180 
Other regions21 30 3   54 
Total$2,280 $886 $389 $347 $89 $3,991 
($ in millions)Old Navy GlobalGap GlobalBanana Republic GlobalAthleta (2)Other (4)Total
13 Weeks Ended May 2, 2020
U.S. (1)$949 $311 $245 $205 $51 $1,761 
Canada77 34 24   135 
Europe 54 3   57 
Asia1 108 12   121 
Other regions11 17 5   33 
Total$1,038 $524 $289 $205 $51 $2,107 
__________
(1)U.S. includes the United States, Puerto Rico, and Guam.
(2)Previously, net sales for the Athleta brand were grouped within the "Other" column. Beginning in fiscal 2021, we have made a change for all periods presented to break out Athleta net sales into its own column.
(3)Primarily consists of net sales for the Intermix brand. Also includes net sales for the Janie and Jack brand through April 7, 2021.
(4)Primarily consists of net sales for the Intermix, Janie and Jack, and Hill City brands.

Deferred Revenue
We defer revenue when cash payments are received in advance of performance for unsatisfied obligations related to our gift cards, credit vouchers, licensing agreements, outstanding loyalty points, and reimbursements of loyalty program discounts associated with our credit card agreement. For the thirteen weeks ended May 1, 2021, the opening balance of deferred revenue for these obligations was $231 million, of which $89 million was recognized as revenue during the period. The closing balance of deferred revenue for these obligations was $222 million as of May 1, 2021.
We expect that the majority of our revenue deferrals as of the quarter ended May 1, 2021, will be recognized as revenue in the next twelve months as our performance obligations are satisfied.
For the thirteen weeks ended May 2, 2020, the opening balance of deferred revenue for these obligations was $226 million, of which $79 million was recognized as revenue during the period. The closing balance of deferred revenue for these obligations was $198 million as of May 2, 2020.
During the thirteen weeks ended May 1, 2021, the Company entered into new long-term credit card program agreements with Barclays and Mastercard. Barclays will become the exclusive issuer of Gap Inc.’s co-branded and private label credit card program in the U.S. beginning in May 2022. Accordingly, our previous private label credit card program with Synchrony Financial will be discontinued in April 2022. During the thirteen weeks ended May 1, 2021, the Company received a $45 million payment relating to the new agreement, which was recorded in other long-term liabilities on our Condensed Consolidated Balance Sheet as of May 1, 2021.
7


Note 3. Debt and Credit Facilities
Long-term debt recorded on the Condensed Consolidated Balance Sheets consists of the following:
($ in millions)May 1,
2021
January 30,
2021
May 2,
2020
2021 Notes$ $ $1,250 
2023 Notes500 500  
2025 Notes750 750  
2027 Notes1,000 1,000  
Less: Unamortized debt issuance costs(32)(34) 
Total long-term debt$2,218 $2,216 $1,250 
The scheduled maturity of the Notes is as follows:
Scheduled Maturity ($ in millions)PrincipalInterest RateInterest Payments
Senior Secured Notes (1)
May 15, 2023$500 8.375 %Semi-Annual
May 15, 2025750 8.625 %Semi-Annual
May 15, 20271,000 8.875 %Semi-Annual
Total issuance$2,250 
__________
(1)Includes an option to call the Notes in whole or in part at any time, subject to a make-whole premium.
As of May 1, 2021, the aggregate estimated fair value of the notes due 2023 ("2023 Notes), 2025 (“2025 Notes”), and 2027 (“2027 Notes”) (collectively, the “Notes”) was $2.57 billion and was based on the quoted market price for each of the Notes (level 1 inputs) as of the last business day of the fiscal quarter. The aggregate principal amount of the Notes is recorded in long-term debt on the Condensed Consolidated Balance Sheet, net of the unamortized debt issuance cost.
In May 2020, we entered into the senior secured asset-based revolving credit agreement (the "ABL Facility"), which has a $1.8675 billion borrowing capacity and bears interest at a base rate (typically LIBOR) plus a margin depending on borrowing base availability. The ABL Facility is scheduled to expire in May 2023. We also have the ability to issue letters of credit on our ABL Facility. As of May 1, 2021, we had $52 million in standby letters of credit issued under the ABL Facility. There were no borrowings under the ABL Facility as of May 1, 2021.
As of May 1, 2021, we were in compliance with the applicable financial covenants and expect to maintain compliance for the next twelve months.
We also had a $500 million, five-year, revolving credit facility, which was scheduled to expire in May 2023. On March 25, 2020, we drew down the entire amount under the revolving credit facility resulting in a total of $500 million outstanding as of May 2, 2020, which was repaid in full on May 7, 2020. The borrowings accrued interest at a base rate (typically LIBOR) plus a margin based on our long-term senior unsecured credit ratings and our leverage ratio. The draw-down proceeds were recorded in revolving credit facility on the Condensed Consolidated Balance Sheet. There were no material outstanding letters of credit under the revolving credit facility as of May 2, 2020.
We also maintain multiple agreements with third parties that make unsecured revolving credit facilities available for our operations in foreign locations (the “Foreign Facilities”). The Foreign Facilities are uncommitted and had a total capacity of $49 million as of May 1, 2021. As of May 1, 2021, there were no borrowings under the Foreign Facilities. There were $11 million in bank guarantees issued and outstanding primarily related to store leases under the Foreign Facilities as of May 1, 2021.
We have bilateral unsecured standby letter of credit agreements that are uncommitted and do not have expiration dates. There were no material standby letters of credit issued under these agreements as of May 1, 2021.
Note 4. Fair Value Measurements
The Company measures certain financial assets and liabilities at fair value on a recurring basis, including derivatives and available-for-sale debt securities. 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 during the thirteen weeks ended May 1, 2021 or May 2, 2020. There were no transfers of financial assets or liabilities into or out of level 1, level 2, and level 3 during the thirteen weeks ended May 1, 2021 or May 2, 2020.
8



Financial Assets and Liabilities
Financial assets and liabilities measured at fair value on a recurring basis and cash equivalents are as follows:
  Fair Value Measurements at Reporting Date Using
($ in millions)May 1, 2021Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets:
Cash equivalents$143 $— $143 $ 
Short-term investments475 365 110  
Derivative financial instruments6  6  
Deferred compensation plan assets49 49   
Other assets4   4 
Total$677 $414 $259 $4 
Liabilities:
Derivative financial instruments$30 $ $30 $ 
  Fair Value Measurements at Reporting Date Using
($ in millions)January 30, 2021Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets:
Cash equivalents$375 $25 $350 $ 
Short-term investments410 342 68  
Derivative financial instruments5  5  
Deferred compensation plan assets43 43   
Other assets2   2 
Total$835 $410 $423 $2 
Liabilities:
Derivative financial instruments$21 $ $21 $ 
  Fair Value Measurements at Reporting Date Using
($ in millions)May 2, 2020Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets:
Cash equivalents$139 $— $139 $ 
Short-term investments51  51  
Derivative financial instruments36  36  
Deferred compensation plan assets47 47   
Other assets2   2 
Total$275 $47 $226 $2 
Liabilities:
Derivative financial instruments$5 $ $5 $ 
We have highly liquid fixed and variable income investments classified as cash equivalents. With the exception of our available-for-sale investments noted below, we value these investments at their original purchase prices plus interest that has accrued at the stated rate. Our investments in cash equivalents are placed primarily in time deposits, money market funds, and debt securities.
9


Our available-for-sale securities are comprised of investments in debt securities and are recorded in both short-term investments and cash and cash equivalents on the Condensed Consolidated Balance Sheets. These securities are recorded at fair value using market prices. As of May 1, 2021, January 30, 2021, and May 2, 2020, the Company held $475 million, $410 million, and $51 million, respectively, of available-for-sale debt securities with maturity dates greater than three months and less than two years within short-term investments on the Condensed Consolidated Balance Sheets. In addition, as of May 1, 2021, January 30, 2021, and May 2, 2020, the Company held $25 million, $90 million and $1 million, respectively, of available-for-sale debt securities with maturities of three months or less at the time of purchase within cash and cash equivalents on the Condensed Consolidated Balance Sheet. Unrealized gains and losses on available-for-sale debt securities included within accumulated other comprehensive income were not material as of May 1, 2021 and May 2, 2020.
The Company regularly reviews its available-for-sale debt securities for other-than-temporary impairment. For the thirteen weeks ended May 1, 2021 or May 2, 2020, the Company did not consider any of its securities to be other-than-temporarily impaired and, accordingly, did not recognize any impairment loss.
Derivative financial instruments primarily include foreign exchange forward contracts. The fair value of the Company’s derivative financial instruments is determined using pricing models based on current market rates. See Note 6 of Notes to Condensed Consolidated Financial Statements for information regarding currencies hedged against the U.S. dollar.
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.
During the thirteen weeks ended May 1, 2021, the Company recorded impairment of operating lease assets of $5 million. The impairment of the operating lease assets reduced the carrying amount of the applicable long-lived assets of $15 million to their fair value of $10 million. The impairment charges were recorded in operating expenses on the Condensed Consolidated Statement of Operations. There were no material impairment charges recorded for store long-lived assets during the thirteen weeks ended May 1, 2021.
During fiscal 2020, the impact of COVID-19 resulted in a qualitative indication of impairment related to our store long-lived assets. For store locations, we analyzed our store asset recoverability. During the thirteen weeks ended May 2, 2020, the Company recorded impairment of store assets of $124 million and impairment of operating lease assets of $360 million. The impairment of the store assets reduced the carrying amount of the applicable long-lived assets of $127 million to their fair value of $3 million. The impairment of the operating lease assets reduced the carrying amount of the applicable long-lived assets of $1,358 million to their fair value of $998 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 thirteen weeks ended May 1, 2021 or May 2, 2020.
Note 5. Income Taxes
The effective income tax rate was 11.2 percent for the thirteen weeks ended May 1, 2021, compared with 26.0 percent for the thirteen weeks ended May 2, 2020. The decrease in the effective tax rate is primarily due to a tax benefit resulting from divestiture activity during the first quarter of fiscal 2021.
10


Note 6. 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 Canadian dollar, British pound, Japanese yen, Euro, Mexican peso, Taiwan dollar, and Chinese yuan. Cash flows from derivative financial instruments are classified as cash flows from operating activities on the Condensed Consolidated Statements of Cash Flows.

Cash Flow Hedges
We designate the following foreign exchange forward contracts as cash flow hedges: (1) 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; and (2) forward contracts used to hedge forecasted intercompany revenue transactions related to merchandise sold from our regional purchasing entity, whose functional currency is the U.S. dollar, to certain international subsidiaries in their local currencies. The foreign exchange forward contracts entered into to hedge forecasted merchandise purchases and related costs, and intercompany revenue transactions 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 (loss) 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.

Outstanding Notional Amounts
We had foreign exchange forward contracts outstanding in the following notional amounts:
($ in millions)May 1,
2021
January 30,
2021
May 2,
2020
Derivatives designated as cash flow hedges$343 $508 $319 
Derivatives not designated as hedging instruments683 811 785 
Total$1,026 $1,319 $1,104 

Quantitative Disclosures about Derivative Financial Instruments
The fair values of foreign exchange forward contracts are as follows:
($ in millions)May 1,
2021
January 30,
2021
May 2,
2020
Derivatives designated as cash flow hedges:
Other current assets$4 $ $16 
Accrued expenses and other current liabilities19 12  
Derivatives not designated as hedging instruments:
Other current assets2 5 20 
Accrued expenses and other current liabilities11 9 5 
Total derivatives in an asset position$6 $5 $36 
Total derivatives in a liability position$30 $21 $5 
All of the unrealized gains and losses from designated cash flow hedges as of May 1, 2021 will be recognized into net income within the next twelve months at the then-current values, which may differ from the fair values as of May 1, 2021 shown above.
11


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 4 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 (loss) related to derivative instruments are as follows:
Location and Amount of (Gain) Loss
Recognized in Net Income (Loss)
13 Weeks Ended
May 1, 2021
13 Weeks Ended
May 2, 2020
($ in millions)Cost of goods sold and occupancy expensesOperating expensesCost of goods sold and occupancy expensesOperating expenses
Total amount of expense line items presented in the Condensed Consolidated Statements of Operations in which the effects of derivatives are recorded$2,361 $1,390 $1,839 $1,512 
(Gain) loss recognized in net income (loss)
Derivatives designated as cash flow hedges 3  (4) 
Derivatives not designated as hedging instruments 11  (43)
Total (gain) loss recognized in net income (loss)$3 $11 $(4)$(43)
Note 7. Share Repurchases
In February 2019, the Board of Directors approved a $1.0 billion share repurchase authorization (the "February 2019 repurchase program"). The February 2019 repurchase program had $800 million remaining as of May 1, 2021. There were no shares repurchased during the thirteen weeks ended May 1, 2021 or May 2, 2020.
Note 8. Earnings (Loss) Per Share
Weighted-average number of shares used for earnings (loss) per share is as follows:
 13 Weeks Ended
(shares in millions)May 1,
2021
May 2,
2020
Weighted-average number of shares - basic376 372 
Common stock equivalents (1)9  
Weighted-average number of shares - diluted385 372 
__________
(1)For the thirteen weeks ended May 2, 2020, the dilutive impact of outstanding options and awards was excluded from dilutive shares as a result of the Company’s net loss for the respective period.
The anti-dilutive shares related to stock options and other stock awards excluded from the computation of weighted-average number of shares – diluted were 7 million and 15 million for the thirteen weeks ended May 1, 2021 and May 2, 2020, respectively, as their inclusion would have an anti-dilutive effect on earnings (loss) per share.
Note 9. 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.
12


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 May 1, 2021, Actions filed against us included commercial, intellectual property, customer, employment, 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 May 1, 2021, January 30, 2021, and May 2, 2020, 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 May 1, 2021, 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 10. Segment Information
We identify our operating segments according to how our business activities are managed and evaluated. As of May 1, 2021, our operating segments included: Old Navy Global, Gap Global, Banana Republic Global, and Athleta. Each operating segment has a brand president who is responsible for various geographies and channels. Each of our brands serves customer demand through well-located stores and digital advantaged 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 May 1, 2021. 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 for stores and online and by brand and region.
Note 11. Divestitures
As part of a strategic review of the Company's brands and businesses, the Company entered into agreements to sell its Janie and Jack and Intermix brands. The sale of Janie and Jack was completed on April 8, 2021. The sale of Intermix was completed on May 21, 2021. The Company reclassified $109 million of assets and $112 million of liabilities for the Intermix brand as held for sale within other current assets and accrued expenses and other current liabilities, respectively, on the Condensed Consolidated Balance Sheet as of May 1, 2021 and measured the disposal group at its estimated fair value less costs to sell. The aggregate carrying amount of assets and liabilities for amounts classified as held for sale primarily consist of $61 million of net operating lease assets, $19 million of inventory, and $97 million of operating lease liabilities.
As a result of these transactions, the Company recognized a pre-tax loss of $56 million within operating expenses on the Condensed Consolidated Statements of Operations during the thirteen weeks ended May 1, 2021.
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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, the United Kingdom, France, Ireland, Japan, Italy, China, Taiwan, and Mexico. Our products are available to customers online through Company-owned websites and through the use of third parties that provide logistics and fulfillment services. We also have franchise agreements with unaffiliated franchisees to operate Gap, Banana Republic, Old Navy, 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
During fiscal 2020, we unveiled our Power Plan 2023 strategy, which reflects long-term plans to grow and strengthen the Company. Since then, we have focused on our key initiatives, including growing Old Navy and Athleta, repositioning and transforming Gap and Banana Republic, growing our online business, expanding into new categories such as inclusive sizing, and scaling strategic partnerships such as our recently announced venture into the Home market through the launch of Gap Home at Walmart.com, to amplify the reach of our brands to customers across product categories, markets, and channels.
In March 2020, the World Health Organization declared COVID-19 a global pandemic and recommended containment and mitigation measures worldwide. As a result, we temporarily closed a large number of our stores globally during the first quarter of fiscal 2020; however, we innovated ways to safely serve customer demand through leveraging our omni-fulfillment capabilities, including curbside pick-up and ship-from-store. We re-opened the majority of our stores that were temporarily closed by the beginning of the third quarter of fiscal 2020. Our results for the first quarter of fiscal 2021 reflect continued domestic recovery from the effects of the COVID-19 pandemic and an ongoing shift in focus from store sales to online sales, however, there continued to be impacts from store closures in international markets and in our supply chain. Pandemic-related costs and increased shipping costs incurred to meet customer demand for our growing online business were offset by fixed cost savings gained through strategic store closures as a result of our fleet rationalization initiatives. Additionally, product acceptance from our customers has improved in response to our investments in demand generation resulting in improved product margins.
In line with our Power Plan 2023, the Company shared its strategic focus 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. The majority of the select stores being considered have leases that expired in fiscal 2020 or will expire in fiscal 2021 which allows us to exit underperforming stores with a minimal net impact to our Consolidated Statement of Operations. As of May 1, 2021, we have closed, net of openings, 195 Gap and Banana Republic stores in North America since the beginning of fiscal 2020.
The Company also expects substantial cash lease buyout amounts relating to a small population of stores we intend to close across multiple brands; however, we expect these buyouts to have a minimal net impact to our Consolidated Statements of Operations. During the first quarter of fiscal 2021, the Company executed store buyout agreements. The net impact of these buyouts was not material to our Condensed Consolidated Statement of Operations. As a result of COVID-19, we suspended rent payments for our temporarily closed stores. We are continuing to work through negotiations with our landlords relating to those leases. The rent abatement benefit was not material to our Condensed Consolidated Statement of Operations for the first quarter of fiscal 2021.
We are continuing our previously shared strategic review of our operating model in Europe. We remain focused on continuing to serve our customers in Europe with asset-light partnerships such as franchise or online. While no decisions have been made, our strategic plans could result in significant costs to the Company including charges related to leases and inventory, and employee-related costs. We are targeting to finalize our plans in fiscal 2021.
On March 19, 2021, the Company entered into an agreement to sell the Janie and Jack brand and on April 30, 2021, entered into an agreement to sell the Intermix brand. We closed the sale of Janie and Jack in April 2021 and the sale of Intermix closed on May 21, 2021. We believe these divestitures will allow the Company to prioritize its strategic focus and resources on growing our four purpose-led, lifestyle brands. We recognized a pre-tax loss of $56 million for the first quarter of fiscal 2021 in conjunction with these transactions. See Note 11 of Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q, for further information.
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As part of our Power Plan 2023, the Company is focused on enhancing its rewards program to attract new customers and create enduring relationships to turn its customers into lifelong loyalists. In April 2021, the Company entered into new long-term credit card program agreements with Barclays and Mastercard. Barclays will become the exclusive issuer of Gap Inc.’s co-branded and private label credit card program in the U.S. beginning in May 2022. In addition, Gap Inc. and Barclays will issue the co-branded credit cards on the Mastercard payment network. Accordingly, our previous private label credit card program with Synchrony Financial will be discontinued in April 2022.
Our business priorities for fiscal 2021 are as follows:
creating product that offers value to our customers through a combination of fit, quality, brand and price;
investing in our four purpose-led lifestyle brands to drive relevance and gain market share;
growing our online business;
attracting and retaining strong talent in our businesses and functions;
reducing our fixed cost structure to fuel demand generation investments;
leveraging our scale to navigate constraints in supply chain;
managing inventory to support a healthy merchandise margin;
rationalizing the Gap and Banana Republic brands;
prioritizing asset-light growth through licensing, online, and franchise partnerships globally; and
continuing to integrate social and environmental sustainability into business practices to support long-term growth.
We believe focusing on these priorities in the near term will propel the Company to execute against the Power Plan 2023 strategy, including leveraging:
The Power of its Brands, reflected by the Company’s four purpose-led, lifestyle brands, Old Navy, Gap, Banana Republic and Athleta;
The Power of its Portfolio, which enables growth synergies across key customer categories; and
The Power of its Platform, which leverages the Company’s powerful platform to both enable growth, such as through competitive omni-channel capabilities, as well as cost synergies, fueled by its scaled operations.
We continue to monitor the evolving pandemic situation and guidance from international and domestic authorities, including federal, state, and local public health authorities and may take additional actions based on their recommendations. In these circumstances, there may be developments outside our control requiring us to adjust our operating plan.
Financial results for the first quarter of fiscal 2021 are as follows:
Net sales for the first quarter of fiscal 2021 increased 89 percent compared with the first quarter of fiscal 2020.
Online sales for the first quarter of fiscal 2021 increased 61 percent compared with the first quarter of fiscal 2020 and store sales for the first quarter of fiscal 2021 increased 115 percent compared with the first quarter of fiscal 2020.
Gross profit for the first quarter of fiscal 2021 was $1,630 million compared with $268 million for the first quarter of fiscal 2020. Gross margin for the first quarter of fiscal 2021 was 40.8 percent compared with 12.7 percent for the first quarter of fiscal 2020.
Operating income for the first quarter of fiscal 2021 was $240 million compared with operating loss of $(1,244) million for the first quarter of fiscal 2020.
The effective income tax rate for the first quarter of fiscal 2021 was 11.2 percent, compared with 26.0 percent for the first quarter of fiscal 2020.
Net income for the first quarter of fiscal 2021 was $166 million compared with net loss of $(932) million for the first quarter of fiscal 2020.
Diluted earnings per share was $0.43 for the first quarter of fiscal 2021 compared with diluted loss per share of $(2.51) for the first quarter of fiscal 2020.

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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 online channels. The calculation of Gap Inc. Comp Sales excludes the results of our franchise business.
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.
For the thirteen weeks ended May 1, 2021, any stores temporarily closed for more than three days as a result of COVID-19 during the first quarter of fiscal 2020 were excluded from the Comp Sales calculations. After temporarily closed stores reopened, subsequent sales were included in the Comp/Non-comp status they were in prior to temporary closure. Online sales continued to be included in the Comp Sales calculation for each period.
As a result of the extensive temporary store closures due to the COVID-19 pandemic, Comp Sales are not a meaningful metric for the thirteen weeks ended May 2, 2020. The Comp Sales for the thirteen weeks ended May 1, 2021 reflect continued recovery from the pandemic.
The percentage change in Comp Sales by global brand and for The Gap, Inc. for the thirteen weeks ended May 1, 2021 is as follows:
 13 Weeks Ended
 May 1, 2021
Old Navy Global35 %
Gap Global29 %
Banana Republic Global(4)%
Athleta27 %
The Gap, Inc.28 %
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Store count, openings, closings, and square footage for our stores are as follows:
 January 30, 202113 Weeks Ended May 1, 2021May 1, 2021
 Number of
Store Locations
Number of
Stores Opened
Number of
Stores Closed (1)
Number of
Store Locations
Square Footage
(in millions)
Old Navy North America1,220 24 1,242 19.9 
Gap North America556 552 5.8 
Gap Asia340 337 2.9 
Gap Europe117 116 1.0 
Banana Republic North America471 469 4.0 
Banana Republic Asia47 48 0.2 
Athleta North America199 — 202 0.8 
Intermix North America31 — — 31 0.1 
Janie and Jack North America (2)119 — — — — 
Company-operated stores total 3,100 38 22 2,997 34.7 
Franchise615 36 77 574  N/A
Total3,715 74 99 3,571 34.7 
Decrease over prior year(8.7)%(5.4)%
 February 1, 202013 Weeks Ended May 2, 2020May 2, 2020
 Number of
Store Locations
Number of
Stores Opened
Number of
Stores Closed (1)
Number of
Store Locations
Square Footage
(in millions)
Old Navy North America1,207 1,208 19.5 
Old Navy Asia17 — 17 — — 
Gap North America675 — 667 7.1 
Gap Asia358 361 3.2 
Gap Europe137 — 130 1.1 
Banana Republic North America541 — 539 4.5 
Banana Republic Asia48 46 0.2 
Athleta North America190 — 191 0.8 
Intermix North America33 — — 33 0.1 
Janie and Jack North America139 — 138 0.2 
Company-operated stores total3,345 11 43 3,313 36.7 
Franchise574 29 598 N/A
Total3,919 40 48 3,911 36.7 
Increase (decrease) over prior year1.6 %(0.3)%
__________
(1)Represents stores that have been permanently closed, not stores temporarily closed as a result of COVID-19.
(2)On April 8, 2021, the Company completed the sale of the Janie and Jack brand. The 119 stores sold are not included as store closures or in the ending balance for fiscal 2021.
Outlet and factory stores are reflected in each of the respective brands.
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Net Sales