Good business position in specialty apparel; Strong cash flow; and Excellent liquidity. Participation in the competitive retail industry; Fashion risk and cyclicality inherent in the special apparel industry; and Difficulty in maintaining customer loyalty. The ratings on San Francisco-based Gap Inc. reflect management's challenge in improving the business fundamentals of its three brands in an intensely competitive industry over the past several years, while maintaining satisfactory credit-protection measures. The company's good market position in casual apparel, geographic diversity, and strong cash flow partially offset these factors. After several years of weak sales trends, Gap Inc.'s top line improved over the past three quarters. Same-store sales were flat in the third quarter ended Oct. 31, 2009, up 2% in the fourth
