The Gap, Inc. - Shareholder/Analyst Call

May.21.13 | About: The Gap, (GPS)

The Gap, Inc. (NYSE:GPS)

May 21, 2013 1:00 pm ET


Glenn K. Murphy - Chairman and Chief Executive Officer

Michelle A. Banks - Chief Compliance Officer, General Counsel, Executive Vice President and Corporate Secretary

Sabrina L. Simmons - Chief Financial Officer, Principal Accounting Officer and Executive Vice President of Finance


Ladies and gentlemen, Gap Inc. Chairman and CEO, Glenn Murphy.

Glenn K. Murphy

Thank you. Keep it down. I was going to introduce myself that I'm Glenn Murphy, Chairman and CEO of Gap Inc. Welcome to Gap, Inc.'s 35th Annual Meeting of Shareholders. I'm joined this morning on the stage, as I've been fortunate for the last 6 years, by Sabrina Simmons, Executive Vice President and Chief Financial Officer; and Michelle Banks, Executive Vice President, General Counsel and Secretary of the Corporation. She's a holder of a title beyond that, but that's what I remember.

Our Board of Directors are here this morning. The only person not in attendance is Doris Fisher, who is our Founder and Honorary Director. And Doris, I know, like she does every year, is listening to the meeting today, but she is not in attendance. But we do have -- our whole board is here: Bobby Martin, who is our Lead Director and Chairman of Governance; we have Adrian Bellamy, who is our Chairman of the Comp Committee; Mayo Shattuck, who is our Chairman of the Audit and Finance Committee; and then we have a few other officiaries. Even though Doris is not in attendance, we have Bob Fisher here and Bill Fisher. And then we have Bella Goren, Katherine Tsang, Domenico De Sole and Jorge Montoya.

Our senior management team is, for the most part, here in attendance and are seated in the front row. And if they're needed, they're going to answer some questions later on. But they're in attendance. They've been critical to the success of the business in 2012. And the agenda for today is that Michelle's going to come up and take you through the formal part of the meeting. Sabrina will then present to our shareholders the financial results for 2012. I'll come back up and talk about the business, the focus and the priorities going forward.

And before I bring Michelle up, I think that all of us can acknowledge the incredible tragedy yesterday in Moore, Oklahoma, in which over 50 people died, 20 children. So Gap Inc., we continue to try to reach out to our employees. So far, we found almost all of our employees, but we'll continue to try. And I'm sure at the end of the week, we'll be making a sizable donation to the efforts in Moore, Oklahoma. So with all that said, Michelle?

Michelle A. Banks

Thank you, Glenn, for calling to order the Annual Meeting of the Shareholders of Gap Inc. Good morning, and welcome, everyone. I'd like to ask you all to please turn off any cell phones or other electronic devices at this time. Today's meeting is being webcast, and the webcast will be recorded and available on Those on the webcast will be in listen-only mode. Those attending in person can find the rules of this meeting at the bottom of the distributed agenda.

We're holding this meeting pursuant to notice mailed to all shareholders of record as of March 25, 2013. As Glenn said, after the formal portion of the meeting, we will hear from Sabrina and Glenn, then we'll answer questions from our shareholders. Please note there is a 2-minute time limit for each person addressing this morning's meeting. John Scheffler of Deloitte & Touche, our independent registered public accounting firm, is also available to ask shareholder questions as appropriate. Please note that only shareholders may ask questions at this meeting.

We will now vote on the 3 proposals outlined in the proxy material. The 3 items on the agenda are: one, the election as directors of the 10 nominees named in our proxy; two, the ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting firm; three, an advisory vote to approve the overall compensation of the company's named executive officers. We have executed affidavits of mailing of notice of the Annual Meeting of the Shareholders of Gap Inc. These state that notice of the meeting has been mailed as required and outlined in the bylaws. The affidavits will be filed with the minutes of today's meeting. Andrew Wilcox, on behalf of Broadridge Financial Services, is here and acting as our inspector of elections for the meeting.

Andrew tells me that a count of the shares represented by proxy shows that we have a quorum to conduct business at the meeting. Before we vote on the 3 proposals, are there any shareholders present who would like to vote in person, by ballot or who would like to turn in or change their proxy? If so, please raise your hand, and we will assist you. If you have already submitted a proxy, you do not need to vote by ballot. Are there any hands?

Okay, I see none. We will now proceed with the 3 items of business before the meeting. The first proposal is the election as directors of the 10 nominees named in our proxy statement. The second proposal is the selection of Deloitte & Touche as our independent registered public accounting firm for the fiscal year ended February 1, 2014. The third proposal is the advisory vote to approve the overall compensation of the company's named executive officers.

The polls for the 3 proposals before this meeting are now open. Again, if you would like to vote by ballot, please raise your hand.


Michelle A. Banks

The polls for each of the proposals before the meeting are now closed. Andrew, can you give me your preliminary report, please?

The 10 nominees for director listed in the proxy statement has been elected. The selection of Deloitte & Touche as the company's independent registered public accounting firm has been ratified, and the advisory vote to approve the overall compensation of the company's named executive officers has been approved. The final report of the inspector of elections will be filed with the minutes of the meeting, and the vote results will be filed publicly on a Form 8-K.

This concludes the formal portion of the meeting. The Annual Shareholders' Meeting is now adjourned. In a moment, we will hear from Sabrina and Glenn.

Before I hand the meeting over to Sabrina to discuss company performance, I want to take this opportunity to discuss some administrative matters. The information in the remaining portion of today's meeting may contain forward-looking statements. These are -- there are important factors that could cause our actual results to differ from these forward-looking statements. Information regarding factors that could cause our results to differ are set forth in our annual report on Form 10-K for the fiscal year ended February 2, 2013, which is available on

As a reminder for the shareholders attending the meeting in person, questions will be answered at the end of Glenn's presentation. Thank you, and Sabrina, come on up.

Sabrina L. Simmons

Thanks, Michelle. Good morning, everyone. I'd like to begin by reviewing our 2012 performance, and then I'll discuss our goals for 2013. In 2012, we set forth 4 priorities: first, grow sales with healthy merchandise margins; second, invest in our business while maintaining discipline; third, grow earnings per share; and fourth, return excess cash to our shareholders. I'm very pleased that we delivered on all of our stated objective. Here are the results.

First, net sales grew by over $1.1 billion to $15.7 billion, with comparable sales up 5%. We achieved this while also improving our merchandise margins by 2 percentage points, driven by lower cost of goods and improved product acceptance across all of our brands.

Second, we invested in talent, product, marketing and store payroll, which contributed significantly to our results in North America. In addition, we made investments to support our strategy of expanding through our channels and new geographies. We also acquired our newest brand, Intermix, at the end of the year. Even with these investments, we expanded our operating margin by 250 basis points to 12.4%. Further, we distributed $1.3 billion of cash to our shareholders through share repurchases and dividends. The bottom line was earnings per share growth of nearly 50% to $2.33.

Let me now turn to 2013. We plan to use a balanced approach to deliver shareholder value in the upcoming year. Our first priority is growing sales with healthy merchandise margins. Our objective is to deliver a modest positive comp on a full year basis in our large existing base. In addition to our comp base, we plan to drive increased revenue through our new brands, channels and geographies, including Athleta, Intermix, Gap China, Old Navy Japan, franchise and our global outlets.

Managing our expenses prudently is another important goal. It's our intention to achieve operating expense leverage while continuing to invest in our strategic priorities like our global growth initiatives and our omni-channel capabilities. With the balanced approach I've described, we're confident we have a path to expanding our operating margins and growing our earnings per share in fiscal 2013.

We also remain committed to returning excess cash to shareholders through our share repurchase and dividend programs. As evidence of our commitment to return cash to shareholders, since 2004, we've utilized about $12 billion to repurchase over 600 million shares at an average price of $20 per share. This has resulted in a 50% reduction to our share count. Over the same period, our dividend has grown nearly sevenfold from $0.09 to an expected $0.60 per share.

In conclusion, we're proud of our track record, not only over the last year but also over the past 5 years, where we delivered value by expanding our operating margin by over 4 percentage points and growing earnings per share at a 17% compound annual growth rate. As a result, our total shareholder return has exceeded the return of the S&P 500 by a meaningful amount over this 5-year period. We feel confident that our long-term strategies will continue to deliver value going forward.

Thank you very much, and I will turn it back over to Glenn.

Glenn K. Murphy

Okay. The time we have remaining, what I'd like to do is do a little bit more of a forward-looking view in the company. Sabrina did a good job talking about what we talked about last year. That was the results she took you through. But the business has to continue to move forward, has to evolve and has to position itself to win in the marketplace. We've always been focused on what is the ultimate mission of Gap Inc. There's 2 parts of the mission. I'll take you through the first part now, and I'm going to end with the second part of what this company stands for.

It begins with Gap Inc. being the world's favorite for American style. And all of our employees know that. Our store managers know that. And that's paramount to how we're going to win in the global marketplace because what differentiates ourself against our other global competitors is this notion of American style and how we bring that to life across our multiple brands in multiple geographies and multiple channels. That's a big part of the company at the core of how we're going to win globally.

Now to take you back just a little bit, if you look at this chart, in 2007, we actually had a very decentralized channel-centric organization. That was absolutely correct for 2007. Our outlet business was not global. Our online business was not global. Franchise was only in 2 countries. So what we did is we had specialized teams, some of the people who are here today, who focused specifically on taking our outlet business global, taking our online business that was only in 1 country, the United States, global. And franchise grew from 2 countries to 40 countries. So we kept it central. It provides a little bit of complication inside the business, but at the end of the day, that was the right thing, knowing that the goal and the dream and the mission at the end of the day was to become the world's favorite for American style.

Last year, the changes we made to our structure really set us up for the beginning of fiscal 2013, and this is what this chart talks about. Now a single brand leader, whether that's Jack Calhoun or Banana Republic, Stephen Sunnucks and Gap brand, Stefan Larsson and Old Navy who are all here today, now they are in charge of the brand. And the brand has become the centerpiece, and they control the brand across all of these channels. They make the decisions on growth, on capital, on people, again, with the intention of taking these 3 global iconic brands around the world to win customers and win market share. So it's a significant change. It unlocks a lot of value for the company. It uncomplicates how we operate and allows these 3 business owners to focus their brands on growth going forward. That's what that chart talks about.

Now with that change, what is the outcome? What is the change in terms of the operating model of Gap Inc.? And this is the best way to demonstrate it to our shareholders. On the left-hand side, you have the global brands I talked about, the 3 of them. On the right-hand side, we have developing brands, brands that we have aspirations for but also brands that are in categories and businesses that our 3 established iconic brands are not in: Athleta, Piperlime and Intermix. We have high hope. These are different businesses right now. The 3 iconic brands, obviously, are in a vertical -- sorry, in a horizontal business in how they manage themselves. This allows us to look at different categories, different brands and really bring a different opportunity for the company to win in North America. Is there a day when I come before our shareholders and one of these brands moves from developing over to global? I think that's a possibility. But most importantly, today, with these 2 different streams, that business now sits on top of what I call the new Gap Inc. And the new Gap Inc. is to bring world-class service, whether that's in supply chain, in IT, in real estate, using our scale, our leverage, our expertise. And most importantly, one of the biggest changes that we talked about last October as the business made these changes but were put in place this February, it also sits on top of an innovation center.

That team, led by Art Peck, the goal is to bring us new innovative ideas on how we position the business going forward. Of course, we need great products, which I'll talk about later on, but innovative ideas. And we are the epicenter of innovation being 30 minutes north of Silicon Valley, big opportunity for us. And Art Peck and his team are going to be working on this, and this is how our brands can access. The brands create the value, and Gap Inc. adds the value to their success.

We'll just take a step back for a second. Let's look at the market in which we operate. I don't think I've showed this slide at an Annual Meeting before, but at Investor Meeting in April, a lot of people saw this. This is a $1.4 trillion market. This sector, apparel, is the second biggest consumer sector, with the exception of the food business. $300 billion here in North America, slow, steady growth, and $1.1 billion in all other rest-of-the-world countries with a lot of those markets with strong growth. We're actually holding market share. It's growing by 10%. So that combination is the market that we are actually focused on. And the key focus for us is how do we gain share. It's a very fragmented business, the apparel business. Now if you think of the grocery business, the drugstore business, the home repair business, these businesses are dominated by 5 or 10 companies. Here, it's highly fragmented, so for us in North America to have a 3.9% share, that's actually quite strong. What's important is we gained share last year. That's just one of the many measurements of success for our company. Are we winning customers? Are we doing the right thing in the markets and communities in which we operate? And are we gaining share? And that was a good year for us in 2012. But then you go down below that and say worldwide, rest of world, excluding North America, we have 25 basis points of share. Now in some markets, we're well above 1%. It speaks to the opportunity as our new brand model, as they go out and explore other franchise channels, specialty outlet or online, how can we gain share in the rest of the world? So this is the measurements that the company's going to use and something I'm happy to bring to our shareholders each and every year, to give you the report card as to whether our strategies are actually driving this kind of success going forward.

Let's go to North America. Well, I talked about earlier the 3 developing brands, the way we're looking at our business in that $300 billion market, which really stretches, if you look at customers, from a value segment to luxury. I mean, more and more, in the last number of years, people mix and match. It's not uncommon to have somebody buy something from a luxury brand or a luxury retailer but also buy something from Old Navy or Gap Outlet or Banana Republic Factory Stores. So our formula for success to get more than 3.9% share in North America is to look at our business on this continuum of value all the way to luxury. So on the value perspective, you have Old Navy, Gap Outlet, Banana Republic Factory Stores, as I mentioned. On the premium side, you have Gap brand, you have Banana Republic, you have Athleta. On the luxury side, we have Piperlime and we have Intermix. That's really one of the formulas for success. If you look at other competitors we have here or new ones who are coming into our market from -- coming to the United States from different markets, they don't have this lineup of unique, differentiated brands that can go out together, some ways be complementary to one another in order to be successful in the marketplace.

The second part of our market share strategy is approaching this business through 2 dimensions. On the top, I think everybody who knows either our business or is a consumer or who's followed the company, it starts with having consistent, great product. Then you got to marry that with compelling marketing. Our brands own that. Three gentlemen I mentioned earlier, they own that part of the business, making sure that happens each and every day. Without it, there is no success. But the customer is changing and continues to change and continues to evolve, so what we have to do in order to win, we have to marry that up with the second dimension, which is a seamless experience for our customers. Whether customers want to shop online, outlet, stores, have it delivered, want to pick it up in the store, want to buy it in a store, delivered to their home, whatever they want, we have to be much more accessible and seamless to them in the transaction. And that's why the team I mentioned earlier called GID, Growth, Innovation and Digital. With the 2 key components of that being the innovation, we can bring in the digital work we're doing currently in our business. That combination of those 2 dimensions are going to differentiate ourselves in the marketplace. We are working hard. We're putting a lot of money in terms of talent and capital to make sure the second dimension becomes a competitive advantage for our business.

At the end of the day, and all of you shareholders know, whether you're in a consumer sector, no matter what part of the consumer sector, you have to ask, do you have a competitive advantage? The worst thing that could happen to any of our business is to become commoditized. You have to always have a unique offering, a point of differentiation and something that I was taught a long time ago, what your competitors are unwilling or unable to do. And that's what we're trying to build with this combination of these 2 dimensions in North America.

Now globally, we should take a quick look at this. I talked earlier about the 25 basis points of share in a $1.1 trillion market. This is the progress report that we, as management team, are presenting to our shareholders. I think most of you probably know these numbers, but here's the progress in 2007 to 2012, all based in a number of countries. Gap clearly has a head start. Now the Gap, I think, the latest report I heard from Stefan -- [indiscernible] is here today. We'll be in 54 countries by the end of 2013. That's the progress Gap is making. Under Jack's leadership now, Banana Republic has always kind of been, as Jack and I talked about, in the shadows of Gap. But now Banana Republic, with this new structure, can grow and get into as many countries, make the right investments and bring that brand, which is really so sought-after because work and how work was evolving, what you wear to work, the versatility of it is so critical to consumers around the world, and Banana Republic has that secret.

Here comes Old Navy. They've been in 2 countries for about 15 years, and now we're into Japan. Huge opportunity for Old Navy to increase the number of countries in order for them to achieve their portion of being the world's favorite for American style. Outlet business, from 4 countries into 6. And as I mentioned earlier, online business was only 1 country just 4 years ago, and now we're in 25 countries with own sites. We control the sites in most countries in Europe, in Japan, in Canada and in China.

Let me end with this. I said there's 2 parts to the company's mission, and this is the company's promise. And the company's promise is foundational to what Gap Inc. stands for. And this was handed down to us over 40 years ago from Don and Doris Fisher, our founders. We have always been about do more than sell clothes. That's what this company has always been about, and that's on so many different dimensions. When I look at it, I look at -- for us, it starts with volunteering. Last year, the 130,000 employees who represent Gap Inc., over 65% of them volunteered, and those volunteer hours were 500,000. That's more than anybody else in our sector.

Now this starts with the work our store managers and our employees do in their communities. And the work is phenomenal, the work they do with people in their communities around the world, not just here in North America. That's a key component of the business.

Now if you look at our 2 big -- and Bobbi Silten's here today, who's the President of our foundation. The 2 big strategies for Gap's foundation -- I'm the Chairman. The #1 strategy is really working with underserved youth in our home markets. We've got a big part of major programs like This Way Ahead, Skills for America's Future. The company has put money and time in trying to do the work in those areas in order to help the markets and the communities in which we operate in.

And lastly is working with women in under -- in developing countries. And the signature program for that is our P.A.C.E. program. By the end of this year, give or take, Bobbi, I believe 20,000 women will have gone through the training that our P.A.C.E. program brings to them in those countries. So foundational for this business. We are not going to waver from it. It's so important to our employees who come here and work for this business because they love fashion, they want to be successful, they're competitive, but at the same time, this is what this business stands for and is all about.

Now that said, I do want to say we're not perfect. We're not the perfect company. This is complicated times, and there's a lot going on. But as you think of issues that have come up recently, like Bangladesh, we were business that went into Cambodia 15 years ago, when that was not popular. We made a lot of investments. We worked with governments. We worked with NGOs. And now there's a very strong apparel, commercial, economically strong business in Cambodia. Same goes for Vietnam. Same goes for Haiti. After the earthquake, President Clinton called us. We were the first company, and still one of the only companies, in Haiti manufacturing. Same with Lesotho. So we understand in the global world in which we operate, there's always going to be unique challenges like Bangladesh. And the fire situation, definitely, the most recent building collapse is an absolute tragedy. We were not in that building. Regardless, it's an absolute tragedy. And that's the reason why we put forward a very comprehensive 4-point plan to make sure we can bring better conditions, more safety to all people who work in Bangladesh. And again, this is a difficult situation, and we are doing everything we can to make things better. But it is the reputation of this business -- we have been leaders in this area. We will continue to lead going forward to make sure -- on all fronts, voluntary, community, underserved youth, women in developing countries are really paramount to what this business stands for.

With that said, I want to thank you all for attending the meeting. I want to thank Sabrina. I want to thank Michelle. And of course, as we always do, I'm happy to take any questions from the shareholders. Pass the mic.

Question-and-Answer Session

Glenn K. Murphy


Unknown Shareholder

My name is [indiscernible], and I'm here representing the United Food and Commercial Workers' Union. We have 8,400 shares of Gap Inc. And I'm just going to read the statement since I didn't write it. So dynamic as you are, but I think it's important for people to hear it. Over the last 4 weeks, 1 million consumers have chastised Gap Inc. for not following the lead of its competitors by signing the accord on fire and building safety, and several U.S. senators have criticized Gap's response to the ongoing Bangladesh crisis. Thousands of media reports and demonstrators outside have cited the unwillingness of Gap to become a leader in Bangladesh's safety and bring other companies along with them as a key reason why apparel workers in Bangladesh continue to die in industrial accidents on a regular basis. Gap has earned a reputation in recent years as a responsible corporation, but it's clear now that Gap management has misjudged the seriousness of this crisis, and the Gap brand is quickly becoming associated with the problems in Bangladesh. As shareholders, we're concerned about this reputational rip. Would you please share with us the results of any studies you've conducted regarding potential damage to Gap's public image resulting from the growing crisis and your handling of the situation? If Gap comes to be associated with Bangladesh's [indiscernible], what damage will this have on shareholder value?

Glenn K. Murphy

Well, I think it's a very good question, and I mean, it can have a very, very long answer. But let me try to give you some of the parts that management has been working on. As I said earlier, Bangladesh is no different than Cambodia a decade earlier and Vietnam and Haiti. They're all complicated situations, and everyone needs to have a unique approach. What we've been doing is -- first of all, the notion of an alliance or, in this case, the European accord, of people coming together and trying to get a common way to solve and to bring value and to bring more safety and security for employees who work in factories in Bangladesh, we actually think that's the right path. I think that there's more value in people coming together than people all going into working with our Bangladeshi vendors because we don't own any factories. We work through third-party vendors. But in order to do that, it must be so much use, and we know this with our vendors that there was a common approach. With that said, we have worked, I can't even begin to tell you in terms of shareholder time, incredible amount of hours trying to get to an accord that is right globally. We've been consistent in our approach, but there's some components of the European accord that didn't make sense for us and didn't make sense for maybe some American other retailers. I can't speak for them. I can only speak for us. So I'm going to come back in a second and just move. In the meantime, since October of last year, we have been on the ground with a world-renowned fire safety inspector, and now that's been married up with a building engineer, and are again, world-renowned, who's working -- they're working shoulder to shoulder. And we have every plan, starting from last October, a year from that date, so by this October coming up to have gotten to every single one of our factories. What's worth saying is there are 6,500 factories in Bangladesh. That's a lot of factories. We are in 73. So we've been very targeted in the factories we went into. With that said, the only way we can vide safety and security from fire or, God forbid, any kind of building collapse is to work through the people that we've hired, working with our vendors, we have an office in Bangladesh, we have people in the field, and going factory by factory and try to make recommendations and changes. And the big way to get that done is -- we went forward last October when we were unable, through huge efforts, I think everybody was well intended on both sides, to get to an accord that can work globally. When it didn't make sense for us for a number of different reasons, this program I just talked about, we also put out $22 million of money, real money from Gap, to help our vendors either get secured loans at a decent price to pay for the repairs, or if for some reason, during the repair, this factory shut down for a period of time and employees were left unable to work, we made money available to pay for them when they weren't [indiscernible]. And those are kind of principles at the core of this agreement we were trying to get to. So the European agreement -- again, we've spent more than anybody else. We are working directly with the authors of it, trying to explain to them we just needed some minor changes because we agree with 90% of it, some minor changes that allow a company like ours and hopefully, other American retailers could join the accord. And that wasn't possible. So we were out there doing the work we're doing every single day. As I said, we're through a lot of factories. Already, the 73, we'll get through all them by next October, and we have no problem reporting back on as we're working with the government, what are we finding, how can people learn from this. But some retailers who signed the accord are in 400-plus factories. That's going to take a long time to get done. Do we wish there could be an alliance globally? Yes. Do we think that we'll just take the current accord signed by Europeans to have a little bit of a change to accommodate American retailers? Yes. I don't think it's a big accommodation. At the end of the day, what I care about is the safety of employees, and at that core, we agree on that. Maybe will there be an American alliance instead? Possibly. But I think that I'll leave it this way. Stay tuned. We're continuing to do our work, but also, behind the scenes, we're working to make sure that other companies, not just the Europeans and some selected Americans, find the ways to bring real solutions to the situation in Bangladesh. Not every factory has a problem, but the ones that do, we want to actually be there, supporting and continue, as you said in your statement, to be the leaders because we have been leaders on this front for over 20-plus years. And we continue to do that because that's what we stand for, and we're never going to change that. Yes, ma'am?

Unknown Shareholder

I'm here representing Amalga Trust, which owns 221 shares of Gap stock. And so Gap has publicly stated that it won't sign the Bangladesh safety accord because it exposes the company and shareholders to too much liability. However, an op-ed in the L.A. Times last Friday returned by highly respected leaders, it demonstrates that there's actually no rational basis to this argument. The law professor states that the accord costs are reasonable and quantifiable. And many major brands and retailers that have signed on, including 2 large U.S. corporations, PVH and Abercrombie & Fitch. So it's not really just European companies, or it's not a European accord. It hopes to be a global accord. So these companies, PVH and Abercrombie & Fitch, obviously consider these costs reasonable. Do you have any legitimate reasons for not signing this agreement?

Glenn K. Murphy

In the risk of becoming repetitive, it's 95% European. You're right, PVH and Abercrombie & Fitch have signed on. The other side of the accord, though, is with unions out of Europe. So it's basically a European accord, but yes, there are a couple of Americans who signed onto it. This is much broader for us than just the legal issue. Sometimes, you think it tied up in what one lawyer says or an op-ed in the Los Angeles Times versus another lawyer might say or from other op-ed. We've been through the agreement page by page for the last number of months. And again, beyond the legal issue, we just -- there's just dispute mechanisms to be figured out for us. Yes, in the United States, there's maybe a bigger legal risk than there is in Europe, which we have to take that into account for all shareholders in our business. If we were to sign onto something that had a limited legal liability and risk, I think our shareholders should care about that. What I think was important to what I said earlier is 2 points. One, if there could be a global accord, with some very minor modifications, very minor modifications to the accord that is out there today, we'd be very interested in looking at that accord. With that said, if there was an American version of the accord, that really, the framework of it is 90% the same that tries to get real safety and security in building and in fire for people who work in factories in Bangladesh, that may turn out to be a good option, too, and solution. Regardless of that, we are working continuously, talking to everybody who's involved. We haven't given up on the fact that a global accord of some kind can be brought together. But what's important to note, regardless, we have a team of experts. We have invested over $1 million so far. We have $22 million of funds available to make sure we can go through the 73 factories in which we operate and try to work side by side with our vendors, with people of the local governments in order to try to make this a much more secure situation than it's been in the last number of years. Now we have a history in Cambodia, in Vietnam. It's not a perfect blueprint because, as I said, we're not a perfect company. This is not a moment for us to beat our chest. There's serious situations that can arise at times in a global supply chain. We take those seriously because of what the company believes in and stands for. So you have my commitment as a shareholder that we continue to work in trying to find the right solution that is good for this company, good for the people, mostly of Bangladesh, who work in those factories, who make clothes for companies around the world, and we are committed to getting that done. And as I said earlier, I think you should stay tuned because I think there's more to come forward on this issue in the next number of weeks.

Are there any other questions? With that said, I want to thank everybody for attending today. Thank you for your support of Gap Inc. I look forward to seeing all of you next year in our Annual Meeting. Thank you.


Ladies and gentlemen, this concludes the Gap Inc. Annual Meeting of Shareholders. Thank you for attending.

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