The ratings on The Gap Inc. were placed on CreditWatch with negative implications Feb. 7, 2002. The CreditWatch listing is based on Standard & Poor's concern that The Gap may not be able to adequately turn around its flagging sales and earnings at Gap, Banana Republic, and Old Navy stores. Standard & Poor's had expected the company to generate some improvement in the beginning of 2002, as it was up against weak comparisons from the year before. However, The Gap's announcement that its merchandise margins continue to suffer from lower markdown margins and higher sales at markdown on a year-over-year basis have reduced Standard & Poor's expectations. The Gap's financial performance has been deteriorating since late 1999 due to the
