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Segment Information
 12 Months Ended
Feb. 02, 2013
Segment Reporting [Abstract]  
Segment Information
Note 16. Segment Information
We identify our operating segments according to how our business activities are managed and evaluated. All of our operating segments sell a group of similar products – apparel, accessories, and personal care products. As of February 2, 2013, we have two reportable segments:
•
Stores – The Stores reportable segment includes the results of the retail stores for Gap, Old Navy, and Banana Republic. We have aggregated the results of all Stores operating segments into one reportable segment because the operating segments have similar economic characteristics.
•
Direct – The Direct reportable segment includes the results of our online brands, as well as Piperlime and Athleta. Intermix is also a component of the Direct reportable segment; however, its results since the date of acquisition are immaterial.
The accounting policies for each of our operating segments are the same as those described in Note 1 of Notes to Consolidated Financial Statements.
Net sales by brand, region, and reportable segment are as follows:
($ in millions)
 
Gap
 
Old Navy
 
Banana
Republic
 
Franchise (3)
 
Other (4)
 
Total
 
Percentage
of Net Sales
Fiscal 2012
 
 
 
 
 
 
 
U.S. (1)
 
$
3,323

 
$
4,945

 
$
2,171

 
$
—

 
$
—

 
$
10,439

 
67
%
Canada
 
352

 
410

 
216

 
—

 
—

 
978

 
6

Europe
 
691

 
—

 
66

 
63

 
—

 
820

 
5

Asia
 
1,062

 
9

 
148

 
86

 
—

 
1,305

 
9

Other regions
 
—

 
—

 
—

 
182

 
—

 
182

 
1

Total Stores reportable segment
 
5,428

 
5,364

 
2,601

 
331

 
—

 
13,724

 
88

Direct reportable segment (2)
 
537

 
748

 
247

 
—

 
395

 
1,927

 
12

Total
 
$
5,965

 
$
6,112

 
$
2,848

 
$
331

 
$
395

 
$
15,651

 
100
%
Sales growth
 
5
 %
 
8
 %
 
8
%
 
17
%
 
31
%
 
8
 %
 
 
($ in millions)
 
Gap
 
Old Navy
 
Banana
Republic
 
Franchise (3)
 
Other (4)
 
Total
 
Percentage
of Net Sales
Fiscal 2011
 
 
 
 
 
 
 
U.S. (1)
 
$
3,231

 
$
4,644

 
$
2,060

 
$
—

 
$
—

 
$
9,935

 
68
%
Canada
 
333

 
392

 
193

 
—

 
—

 
918

 
6

Europe
 
702

 
—

 
54

 
69

 
—

 
825

 
6

Asia
 
966

 
—

 
131

 
79

 
—

 
1,176

 
8

Other regions
 
—

 
—

 
—

 
135

 
—

 
135

 
1

Total Stores reportable segment
 
5,232

 
5,036

 
2,438

 
283

 
—

 
12,989

 
89

Direct reportable segment (2)
 
433

 
638

 
188

 
—

 
301

 
1,560

 
11

Total
 
$
5,665

 
$
5,674

 
$
2,626

 
$
283

 
$
301

 
$
14,549

 
100
%
Sales growth (decline)
 
(1
)%
 
(4
)%
 
2
%
 
45
%
 
22
%
 
(1
)%
 
 
($ in millions)
 
Gap
 
Old Navy
 
Banana
Republic
 
Franchise (3)
 
Other (4)
 
Total
 
Percentage
of Net Sales
Fiscal 2010
 
 
 
 
 
 
 
U.S. (1)
 
$
3,454

 
$
4,945

 
$
2,084

 
$
—

 
$
—

 
$
10,483

 
71
%
Canada
 
341

 
427

 
190

 
—

 
—

 
958

 
7

Europe
 
703

 
—

 
36

 
47

 
—

 
786

 
5

Asia
 
872

 
—

 
118

 
59

 
—

 
1,049

 
7

Other regions
 
—

 
—

 
—

 
89

 
—

 
89

 
1

Total Stores reportable segment
 
5,370

 
5,372

 
2,428

 
195

 
—

 
13,365

 
91

Direct reportable segment (2)
 
365

 
533

 
155

 
—

 
246

 
1,299

 
9

Total
 
$
5,735

 
$
5,905

 
$
2,583

 
$
195

 
$
246

 
$
14,664

 
100
%
Sales growth
 
2
 %
 
2
 %
 
5
%
 
38
%
 
32
%
 
3
 %
 
 

__________
(1)
U.S. includes the United States and Puerto Rico.
(2)
In July 2010, we began selling products online to customers in select countries outside the U.S. using a U.S.-based third party that provides logistics and fulfillment services. In August 2010, we began selling products online to customers in select countries outside the U.S. utilizing our own logistics and fulfillment capabilities. Online sales shipped from distribution centers located outside the U.S. were $172 million ($117 million for Canada, $50 million for Europe, and $5 million for Japan), $127 million ($89 million for Canada and $38 million for Europe), and $42 million ($30 million for Canada and $12 million for Europe) in fiscal 2012, 2011, and 2010, respectively.
(3)
Franchise sales were $331 million ($289 million for Gap and $42 million for Banana Republic), $283 million ($247 million for Gap and $36 million for Banana Republic), and $195 million ($171 million for Gap and $24 million for Banana Republic) in fiscal 2012, 2011, and 2010, respectively.
(4)
Includes Piperlime and Athleta.
Gap and Banana Republic outlet retail sales are reflected within the respective results of each brand.

Financial Information for Reportable Segments
Operating income is a primary measure of profit we use to make decisions on allocating resources to our operating segments and to assess the operating performance of each operating segment. It is defined as income before interest expense, interest income, and income taxes. Corporate expenses are allocated to each operating segment and recorded in operating income on a rational and systematic basis.
Reportable segment assets presented below include those assets that are directly used in, or allocable to, that segment’s operations. Total assets for the Stores reportable segment primarily consist of merchandise inventory, the net book value of store assets, and prepaid expenses and receivables related to store operations. Total assets for the Direct reportable segment primarily consist of merchandise inventory, the net book value of IT and distribution center assets, and the net book value of goodwill and intangible assets as a result of the acquisitions of Athleta and Intermix. We do not allocate corporate assets to our operating segments. Unallocated corporate assets primarily include cash and cash equivalents, short-term investments, the net book value of corporate property and equipment, and tax-related assets. Reportable segment capital expenditures are direct purchases of property and equipment by that segment. Unallocated capital expenditures primarily consist of corporate purchases of property and equipment.
Selected financial information by reportable segment and reconciliations to our consolidated totals are as follows:
 
 
Fiscal Year
($ in millions)
 
2012
 
2011
 
2010
Operating income:
 
 
 
 
 
 
Stores
 
$
1,508

 
$
1,095

 
$
1,666

Direct
 
434

 
343

 
302

Operating income
 
$
1,942

 
$
1,438

 
$
1,968

Depreciation and amortization expense:
 
 
 
 
 
 
Stores
 
$
496

 
$
533

 
$
584

Direct
 
63

 
59

 
64

Depreciation and amortization expense
 
$
559

 
$
592

 
$
648

Purchases of property and equipment:
 
 
 
 
 
 
Stores
 
$
364

 
$
362

 
$
391

Direct
 
89

 
70

 
55

Unallocated
 
206

 
116

 
111

Purchases of property and equipment
 
$
659

 
$
548

 
$
557


($ in millions)
 
February 2,
2013
 
January 28,
2012
Segment assets:
 
 
 
 
Stores
 
$
3,407

 
$
3,315

Direct
 
886

 
591

Unallocated
 
3,177

 
3,516

Total assets
 
$
7,470

 
$
7,422


Long-lived assets, excluding long-term derivative financial instruments in an asset position and long-term deferred tax assets, by geographic location are as follows: 
($ in millions)
 
February 2,
2013
 
January 28,
2012
U.S. (1)
 
$
2,488

 
$
2,245

Canada
 
196

 
191

Total North America
 
2,684

 
2,436

Other regions
 
445

 
462

Total long-lived assets
 
$
3,129

 
$
2,898


__________
(1)
U.S. includes the United States and Puerto Rico.
Net sales by region are allocated based on the location in which the sale was originated. Store sales are allocated based on the location of the store, and online sales are allocated based on the location of the distribution center from which the products were shipped. Net sales by geographic location are as follows:
 
 
Fiscal Year
($ in millions)
 
2012
 
2011
 
2010
U.S. (1)
 
$
12,194

 
$
11,368

 
$
11,740

Canada
 
1,095

 
1,007

 
988

Total North America
 
13,289

 
12,375

 
12,728

Other regions
 
2,362

 
2,174

 
1,936

Total net sales
 
$
15,651

 
$
14,549

 
$
14,664


__________
(1)
U.S. includes the United States and Puerto Rico.