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.

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

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.

One of our biggest concerns is that we haven't been able to pay staff very much. The starting salary for lawyers is about $31,500. It's a real barrier to getting and keeping people. We need people working here who really understand what our services are all about. It's an issue we're really struggling with.

That's really going to help us address a large issue.