G.A.

I. INTRODUCTION:

1. History:

Doris and Don Fisher opened the first Gap store in 1969 with a simple idea - to
make it easier to find a pair of jeans and a commitment to do more. Over the last
50 years, the company has grown from a single store to a global fashion business
with seven brands - Gap, Banana Republic, Old Navy, Athleta, Intermix, Hill City,
and Janie and Jack. Gap's clothes are available in 90 countries worldwide through
over 3,100 company-operated stores, almost 400 franchise stores, and e-commerce
sites and is still growing.

2. Mission:
Gap is a brand-builder. “We create emotional connections with customers
around the world through inspiring product design, unique store experiences
and compelling marketing.” Its goal is to simply make it easy for customers
to express their personal style throughout their life.
3. Vision:
GAP hopes that effective Web initiative could let company to solidify its
brand, improve customer relationships, serve markets that could not support
a store and cut costs. Company also believes that going online would attract
new customers and steal market share from other competitors.
4. GAP reports second quarter results:

For the second quarter ended August 3, 2019:

Net sales were $4.0 billion, a decrease of 2% compared with last year.
The translation of foreign currencies into U.S. dollars negatively impacted
the company’s net sales for the second quarter of fiscal year 2019 by about
$22 million.
Second quarter net sales details appear in the tables at the end of this press
release.
Gross profit was $1.56 billion, a decrease of 4% compared with last year.
Gross margin was 38.9%, a decrease of 90 basis points compared with last
year.
Operating margin was 7.0%, a decrease of 270 basis points compared with
last year. Adjusted operating margin was 8.3%, a decrease of 140 basis
points compared with last year. Please see the reconciliation of adjusted
operating margin, a non-GAAP financial measure, from the GAAP financial
measure in the tables at the end of this press release.
The effective tax rate was 38.0% for the second quarter of fiscal year 2019.
The second quarter effective tax rate reflects adjustments to our fiscal year
2017 tax liability for additional guidance issued by the U.S. Treasury
Department regarding the U.S. Tax Cuts and Jobs Act of 2017 (“TCJA”) and
non-cash tax impacts related to restructuring charges incurred in the quarter.
These items resulted in an increase to the effective tax rate of approximately
12 percentage points.
Diluted earnings per share were $0.44 compared to $0.76 last year. Adjusted
diluted earnings per share were $0.63 for the second quarter of fiscal year
2019. Please see the reconciliation of adjusted diluted earnings per share, a
non-GAAP financial measure, from the GAAP financial measure in the table
at the end of this press release.
The company noted that foreign currency fluctuations negatively impacted
earnings per share for the second quarter of fiscal year 2019 by an estimated
$0.01.
The company ended the second quarter of fiscal year 2019 with $2.33 billion
in merchandise inventory, up about 6% year over year. The company noted
that the increase in merchandise inventory was impacted by increases in in-
transit times, the acquisition of Janie and Jack, which occurred in the first
quarter of fiscal year 2019, and net store growth year over year.
During the quarter, the company repurchased 2.7 million shares for $50
million and ended the second quarter of fiscal year 2019 with 376 million
shares outstanding.
The company paid a dividend of $0.2425 per share during the second quarter
of fiscal year 2019. In addition, on August 14, 2019, the company
announced that its Board of Directors authorized a third quarter dividend of
$0.2425 per share.
The company ended the second quarter of fiscal year 2019 with $1.5 billion
in cash, cash equivalents, and short-term investments. Year-to-date free cash
flow, defined as net cash from operating activities less purchases of property
and equipment, was $259 million compared with $220 million last year.
Please see the reconciliation of free cash flow, a non-GAAP financial
measure, from the GAAP financial measure in the tables at the end of this
press release.
 Fiscal year-to-date 2019 capital expenditures were $324 million.

The company ended the second quarter of fiscal year 2019 with 3,877 store
locations in 44 countries, of which 3,356 were company-operated.

*Source: coporate.gap.inc.com

2019 Outlook

Earnings per Share

The company updated its reported diluted earnings per share guidance for
fiscal year 2019 to be in the range of $1.88 to $2.08. The company affirmed
its fiscal year 2019 adjusted diluted earnings per share guidance range of
$2.05 to $2.15.

Comparable Sales
The company continues to expect comparable sales for fiscal year 2019 to be
down low single digits.

Effective Tax Rate

 The company now expects its reported fiscal year 2019 effective tax rate to
be about 30%. Excluding the current quarter adjustments to our fiscal year
2017 tax liability for additional tax reform guidance and certain non-cash tax
impacts related to expected restructuring charges, the company continues to
expect its adjusted fiscal year 2019 effective tax rate to be about 26%.

Share Repurchases
The company continues to expect to repurchase approximately $50 million
per quarter through the end of fiscal year 2019.

*Source: Gap Inc. blogs

5. GAP in Vietnam:

Gap is distributed by AFCF – one of the two subsidiaries of Imex Pan Pacific
Group (IPPG), are leaders in mid-tier fashion brand management and distribution,
and a driving force of retail and distribution networks that provide full-service

retail management in Vietnam.

Gap was officially launched in Vietnam in 2011 with the first store located in
Vincom Dong Khoi shopping center. Gap has expanded to more than 9 stores in
the largest and the most modern shopping centers in Vietnam such as Saigon
Centre, Vincom Landmark 81, Diamond Plaza, Trang Tien plaza, Aeon Mall Tan
Phu, The Garden Shopping Center, etc.

II. POLITICAL

Vietnam's Political system includes

• Communist party

• State system:

- National Assembly

- President: Nguyen Phu Trong (incumbent)

- Government

- The supreme people court

• Vietnam Fatherland Front

• Trade Unions

1. Corruption

In the latest 2018 Corruption Perceptions Index (CPI) by Transparency

International, Vietnam ranked 117th amongst 180 countries and territories,
dropping by 10 places compared to 2017. It scored 33 points out of 100 in the
2018 CPI, down two points compared to 2017.

This was a surprising result as Vietnam has made significant efforts in its fight
against corruption since 2016.

During the 2012 - 15 period, Vietnam scored 31 points, while in 2016 and 2017,
it scored 33 and 35 points respectively
 According to a 2018 survey conducted by the Mekong Development Research
Institute in Vietnam, corruption (15. 96 percent) was the third leading concern of
the Unsplash, after employment (24.12 percent) and air pollution (17.06 percent) in
Vietnam

Educated Unsplash were more concerned about corruption, with over 50 percent
of postgraduates viewing corruption as a major risk, while only eight percent of
equality without degrees saw it as a major concern.

There was also a difference between the public and the private sector. Almost a
quarter (23 percent) of the public sector said that corruption is a cause for concern,
while it was only 14 percent for the private sector.

On a positive note, 68 percent of the intelligent believed that corruption will

reduce in the next five years, driven by the country's anti-corruption crackdown.
Going forward According to the Transparency International report, Vietnam has
made progress in curbing corruption by ages its anti-corruption legal framework
and prosecuting corrupt individuals, especially in the energy and banking sectors.
However, these are only part of an effective strategy, as it also needs to strengthen
its democratic institutions, ensure trial fairness, and increase political riahts

In sum, Vietnam's anti-corruption campaign has been formed by a "slow but

sure" approach, underpinned by a combination of strong political will and well-
measured tactics to tackle corruption while minimizing unwanted impact on social
and political stability. The recent meeting of CSCAC is an indication that the
campaign will continue to intensify in the coming years, especially in the lead-up
to the Party's 13th national congress in 2021. These developments will have
significant implications for personnel recruited at the congress and therefore
deserve close attention from Vietnam watchers
source: https://www.vietnam-briefing.com/news/vietnams-corruption-perception-
ranking-declines-2018.html/

2. Inflation

Inflation stays muted in September

According to the General Statistics Office of Vietnam, consumer prices rose

0.32% in September over the prior month, up from August's 0.28% increase.
September's reading was driven by higher prices for education services and food-
linked to African swine fever and flooding-offset by lower healthcare costs

Inflation ticked down from 2.3% in August to 2.0% in September, remaining in

line with the Central Bank's target of below 4.0% inflation. Core inflation was
stable at 2.0% Moderate inflation so far this year can exported be attributed to
muted oil prices.

Looking ahead, inflation is seen rising somewhat from its current level on strong
domestic demand, but nonetheless should stay on target.

FocusEconomics Consensus Forecast panelists expect inflation to average 3.0%

in 2019, which is up 0.1 percentage points from the prior month's estimate, and
3.6% in 2020, which is unchanged from last month's forecast

Inflation in Vietnam and other countries is usually calculated as the percent

change in the Consumer Price Index (CPI) from one year to the next. The CPl
represents the prices paid by the average urban consumer in each accredited
country. Inflation can also be calculated with other price indexes such as the
Produce Price Index or the so- called GDP deflator.
source: https://www.focus-economics.com/country-indicator/vietnam/inflation

III. ECONOMIC:

Vietnam GDP data. Source: tradingeconomics.com | World bank

The GDP per capita number in Vietnam has been successfully increased from
1,525.116 USD (2011) to 2,563.821 USD (2018), $198.199 higher than in 2017, it
was 2,563.821 USD.
Source: tradingeconomics.com

GDP of Vietnam grew 7,1% in 2018 compared to last year. This rate is 3-tenths of
one percent higher than the figure of 6,8% published in 2017. The GDP figure in
2018 was $241,272 milion, Vietnam is number 47 in the ranking of GDP of the
196 countries. The absolute value of GDP in Vietnam rose $20,896 milion with
respect to 2017.

Source: tradingeconomics.com
With the improvement of both the Annual GDP Vietnam and the GDP per capita
of Vietnam, we can see it’s one of the big opportunities for Gap to grow and bring
their products to the customers as long as compete with other brands in the market
place of fashion and other relevant stuffs.

IV.1. SOCIAL
IV.3.1. Natural

Their current environmental approach centers on addressing their contributions to

climate change, waste and water stewardship.

Making improvements in their policies, practices, processes and decision-making.

They are also forming partnerships—with their brands, cut and sew vendors, textile
mills and laundries, industry initiatives, civil society organizations and
governments—to make a larger impact.

They take a holistic approach to addressing environmental issues, looking at ways

to minimize the impacts of both their direct operations and their broader supply
chain.

IV.3.1.1. Pollution

They achieve a 50% absolute reduction in the GHG emissions of their owned and
operated facilities globally between 2015 and the end of 2020, establishing a scope
3 goal to reduce upstreams and downstream emission.

They installed LED lighting—which use 80% less energy than conventional
lights—at over 1,000 of their stores.

They increased their efforts in

areas where we have direct
influence: raw materials
selection, fabric development,
garment production and
finishing.

They aim to eliminate the

discharge of hazardous
chemicals within their supply
chain to reduce our environmental impact and improve access to clean, safe water
in the communities where their suppliers and
mills operate.

By being member of world enviromental

organization, GAP is one of the companies
leader to protect the enviroment and stop
pollution.

IV.3.1.2. Water storage

Building awareness and educating the women

who make their clothes about safe water-
handling practices, and by increasing their
access to safe water.

Adopting more water-efficient product design

and sourcing practices

In 2018, they helped to create “Businesses for Water Security in the Noyyal
Bhavani River Basin,” focused on improving
the long-term sustainability of India’s
Cauvery River Basin, a critical watershed in
one of their key sourcing regions.

They are also learning and sharing best

practices for WASH and water stewardship to
catalyze progress across the apparel industry
and beyond. GAP cares about how their consumer have clean water to use, that is
their first concern. Beside changing their products materials and their producing
way the save the clean water, they also have campaigns for women which helps
women in laundry and cooking with clean water.

Source: https://www.gapincsustainability.com

IV.3.2. Cutural
IV.3.2.1. Religion

Religion in Vietnam is divided into 5 main categories: Buddhism, Catholicism,

Caodaism, Protestantism, and most of them belong to the Folk religion or no
religion
Among the religions in Vietnam, Buddhism has the largest number of followers,
from 80% to 90% of the Vietnamese population is predisposed to Buddhism.
According to statistics of the Vietnam Government Committee for Religious
Affairs in 2005, there are currently nearly 10 million Buddhists.
Christianity first came to Vietnam in the early 16th century by missionaries from
Spain and Portugal, formerly Vietnam was a French colony. France encourages
people to follow a new religion because they think it will help balance the number
of new followers of Buddhism and Western culture. There are currently about 5.5
million Catholics in Vietnam, and about 6,000 churches in many parts of the
country.
Caodaism is a Vietnamese indigenous religion established in 1926, centered on the
Tay Ninh Holy See. This religion worships Cao Dai (or God), Buddha and Jesus.
There are currently about 2.4 million Cao Dai followers in Vietnam, mainly
distributed in southern provinces (especially Tay Ninh).
Protestantism was introduced to Vietnam in 1911. At first, this religion was only
allowed in French-administered regions and was banned in other regions. It was
not until 1920 that Protestantism was allowed to operate throughout Vietnam. In
2004, the number of Protestants in Vietnam was about 1 million, mainly
concentrated in Ho Chi Minh City, the Central Highlands and Northwest.
Hoa Hao Buddhism, or Hoa Hao Buddhism, is a Vietnamese religion closely
linked to the Buddhist tradition, founded in 1939 in Hoa Hao village, Tan Chau
district (now An Giang), Chau Doc. There are currently about 1.3 million Hoa Hao
followers concentrated mainly in the Southwestern region.
In general, the religions in Vietnam are not too forceful, restrictive about costumes,
just need to be polite, discreet, suitable for the sanctuary. In religion, Vietnamese
people consciously use costumes that are appropriate with customs, practices, and
objectivity to the objective reality in Vietnam, contributing to giving the whole
religion a unique Vietnamese color. Therefore, Gap's fashion design trends in
almost all products meet and meet the needs of consumers in Vietnam.
To date, Vietnam has become the country with the fastest Internet growth rate in
the region and among the countries with the highest growth rates in the world. 15
After 15 years of connecting to the global Internet, as of September 2012, Vietnam
had 31,034,900 Internet users, accounting for 33.9% of the population (according
to Wikipedia), with hundreds of service providers. . The development is not only
reflected in the figures of growth rate, type of services, number of accesses but also
reflected by the people having access to the Internet anytime, anywhere. As of
March 2013, with 16.1 million Internet users per month, Vietnam is currently the
country with the largest number of Internet users in Southeast Asia,Compared to
the same period last year, the number of Internet users in Vietnam has increased by
14%. Some strong points about internet in Vietnam : Strong economic
performance and diminishing poverty levels, Geographical location in one of the
world’s most dynamic regions,Sizeable labor force and favorable
demographics,Substantial national education effort and good secondary education
performance, Attractiveness for investment by multinational enterprises, Export
strengths in a range of sectors.

IV.3.2.2. Life style

Economic development, rising living standards, people pay more and
more attention to consumer products including clothing needs.
Globalization is a condition for the exchange and export of products of
social production in the world. Therefore, although Vietnam is a weak
manufacturing base with a large number of quality products, but thanks
to the exchange of products in economic exchange, we have a rich
product market, Diverse, high quality. Vietnamese people's consumption
patterns far exceed their previous needs and interests; It was raised to a
new level of extreme diversity according to the vision of the industrial
society. In a very short time, Vietnamese consumers' lifestyle shifted
sharply from the consumption level of a poor agricultural country to the
consumption lifestyle of industrial society. The slow lifestyle is now
replaced by a fast-paced lifestyle. The lively rhythm is not only due to
the operation of the market mechanism, but also to the attractive
industrial and international atmosphere. The atmosphere of life and the
international rhythm of life affect not only the life and the rhythm of the
nation but also the individual. Workers like being absorbed in lifestyle of
market economy, intellectual economy, science and technology; pupils
and students swirled in the exponentially increasing rate of knowledge.
Urgent labor style does not allow people to hesitate and rely. but have to
be self-motivated, take the opportunity, win the living environment of the
time.
Moreover, the trend and aesthetic tastes of consumers for fashion
products also change continuously. Besides, the lifestyle of Vietnamese
people is based on the criteria of modernity, youthfulness, dynamism
and comfort. Gap brand from the beginning has always targeted the
younger generation. Therefore, GAP provides clothing for all types of
customers, from children, teenagers to office workers or business
managers.
V. TECHNOLOGY
According to statistics from Organization for Economic Cooperation and
Development (OECD), the proportion of online shopping accounted for 37% in
2014 and increased to 50% in 2015. Figures This impression stems from the very
distinct advantages of online buying such as:-Consumers easily access to product
information from various sources: website, social networks (facebook, instagram,
...). In particular, there are websites that offer price comparison services from other
websites that have helped consumers with their online purchases.

ecommerce level

leve

company’s
web

Products are banned / withdrawn - The product has a labeling problem - Non-
standard products

Percentage of consumers affected when buying online domestically (Source:

Ministry of Industry and Trade of Japan - E-Commerce Market Survey of
Financial Year 2014)

Situation of online shopping in Vietnam In Vietnam, in the past 5 years, online

shopping is becoming more and more popular. The e-commerce platforms offer a
variety of items and flexible, rich payment methods, allowing consumers to shop
online quickly and conveniently.

--Vietnam is one of the countries with strong internet growth, and a large
number of online user. that’s why online marketing thrives in our country

Source: Ministry of Industry and Commercy Vietnam