However, the company's square footage growth is weighted towards Old Navy and not the Gap. The retailer may close more of its Gap stores and expand Old Navy given that there's a higher market in the value segment.

Gap is working through its turnaround and still dealing with branding issue and how to reinvigorate its core apparel basics.

We've gone through the Mod look with peasant blouses and last year we saw ... vintage jeans and T-shirts. The '80s theme plays nicely to teen shoppers.

We believe the fundamentals continue to materially improve and that sales productivity and margins will continue to improve in 2006.