Key questions and answers from the fourth quarter fiscal 2009 earnings call as presented by Gap Inc (GPS: chart) on February 26, 2009

Lorraine Maikis (Bank of America/Merrill Lynch): Can you just talk about why in this environment you are opening new stores and give us an idea of the performance of the outlet, if that is driving those openings?

Glenn Murphy: We believe in our international business, namely the corporate international business we control in the U.K., the Republic of Ireland, France and Japan, we still have some opportunities to open some stores.

One of those is that Banana Republic really just has one store currently and it is at Regent Street in London, so we see some opportunities for Banana Republic in the U.K. In Japan as we go forward there are also some Banana Republic opportunities.

They are more store in store opportunities in department stores. Then we have some outlet opportunities in North America, mostly in Canada, where we only have two outlet stores right now, and in Japan, where we only have 10 - 10 in the U.K. - where we have less than 10.

So that 50 new stores, is split between international and outlets.

Lorraine Maikis (Bank of America/Merrill Lynch); Could you give us an update on your real estate initiatives on how the discussions with the landlords are going about closing or consolidating stores?

Glenn Murphy: When it comes to the store closures, and as leases expire and they get terminated, then we have a chance to close stores to a combination of relocations.

Pure closures, are about 100 stores in 2009, and that is just the normal course of business. That is about 3% of our fleet. We have had those conversations on a much larger scale in terms of closures over the last five or six years.

In terms of our ability to reposition locations, we are trying to consolidate stores where it makes sense. This is mostly Kids and Baby locations and the Gap locations. And create a combo store, as we call it here, but also downsizes of Old Navies.

If things are buoyant, there are always going to be some different kinds of conversations and negotiations. When times are a little rougher like they are right now, there is no such thing as the perfect time to have these conversations.

Michelle Tan (Goldman Sachs): Could you give us a little more color on how you plan to emphasize the value message at Old Navy and how that might be changing versus what you did for holiday?

Glenn Murphy: Our Christmas holiday campaign was a little more value based. But that was a bridge.

It was done with our agency that we have been working with for a few years, and we changed the target consumer, we got a little more focused on what Old Navy brand really stands for, which is, a combination of family, fun, and value.

And when you put those together, we moved fairly quickly to change the marketing vehicle we had over the holiday.

This campaign is a complete departure than what you saw over the holiday. And it plays to everything that Old Navy's about. If we were one-dimensional only then we would have a pure price campaign.

If we thought our business was only about family, then it would be 100% focused on it. Or if it was all about what I think brings Old Navy together, which is this fun component, the personality and the soul of the brand, I think our new agency working with Tom White and his team have really struck the right balance between the three of those.

In this environment we would also have a value message. At the core that is what Old Navy is all about. But I think in this environment, we have managed for this campaign.

It is not just television; it is through the new circular that comes out on Sunday, how we will position our message online, what we are doing through viral communication. So it is really a fully integrated marketing and communication campaign that has been worked on for the last three or four months.

If the product started to be right directionally, we would consider going and spending the money. In this case here the last component of that is the consumer's willingness to accept the message, and when you talk about a value player like Old Navy, we could not think of a better time to actually go out and reposition the brand under those three pillars.