The ratings on San Francisco, Calif.-based The Gap reflect the company's strong business position in casual apparel, geographic diversity, and strong cash flow. This is offset, in part, by management's challenge to continue to improve the business position of its three brands in an industry that is intensely competitive. Management's initiatives to improve product quality and assortment, store execution, and inventory management, as well as the rationalization of its store base, have resulted in significantly improved operating performance. The Gap's operating margin rose to 22.4% in the trailing 12 months ended Oct. 30, 2004, from 21.5% in the same year-ago period and a low of 14.0% in 2000. Standard & Poor's Ratings Services believes that the company has the opportunity
