The ratings on San Francisco-based Gap Inc. (The) reflect Standard&Poor's Ratings Services' expectations that sales trends will continue to stabilize due to merchandising and marketing initiatives, and that credit measure will remain above average for the rating as the company maintains tight cost control. We also expect Gap to maintain a moderate financial policy. We view Gap's business risk profile as fair, reflecting the intensely competitive nature of apparel retailing and management's challenge in improving the business fundamentals of its three brands in an intensely competitive industry over the past several years. The company's good market position in casual apparel, geographic diversity, and strong cash flow generation partly mitigate those factors. Gap's top line improved over the past
