Good morning.
Good morning.
Thank you. One person's awake. I want to welcome you to Gap Inc.'s 38th annual shareholder meeting. I'm Glenn Murphy, Chairman and CEO. With me on the stage, as they have been for the last seven years, are Sabrina Simmons, our CFO, Michelle Banks, our General Counsel, and Michelle will act as Secretary for the meeting. This morning, on the front row, we have our Board of Directors. They're all in attendance. We have our Chairman of the Nominating Governance Committee, also our Lead Director, Bobby Martin, somewhere in the front row.
Back here. Using dim lighting. You know what happens. You know the form. I mean, I don't know.
You're off to a great start. In our front row, however, is our Chairman of our Audit and Finance Committee, Mayo Shattuck. We have Bill Fisher, Bob Fisher. We have Katherine Tsang, Bella Goren, Padma Warrior, Domenico De Sole in the third row, and Jorge Montoya. I want to mention on the phone this morning is Doris Fisher, our founder. Doris couldn't be here this morning, but she is listening in, and it's important to note that this is the 45th anniversary of the birth of Gap brand, which was August 23, 1969. It's exciting to have Doris listening in on the call as she does every time. One more special notice that not standing for nomination this year after an incredible 19-year run as a board member of Gap Inc. is Adrian Bellamy.
I know our shareholders hold the responsibility of the board very important because they're not in the boardroom, but they are shareholders of the company, and I can tell you that nobody has served this business better when it comes to transparency, the integrity of management, support of management in general in the work they do, and making sure the voice of the shareholders was constantly heard inside the boardroom walls and in multiple phone calls between board meetings. I want to thank personally, on behalf of the board and management, this incredible service of Adrian Bellamy. Our senior management is here this morning, and they're scattered between the first and second row. I do want to call out just one person who's new to the global management team. That's Sonia Syngal, who's our Executive Vice President of Supply Chain. Sonia.
We have an agenda for today, the agenda is that Michelle's going to come up and go through the formal part of the meeting, then you'll hear from Sabrina, who will present the financial report for our 2013 to all our shareholders. I'll come back up and give all shareholders an update on the company's strategic initiatives, what we're working on to drive even more shareholder value. I've asked Bob Fisher to address our shareholders. Bob, the Fisher family being the biggest shareholder. I want Bob to come up. It is the 45th year, also, I think it's important every now and then to hear from our largest shareholder.
We have another special guest, Susan Goss Brown, who's our VP of Stores for Banana Republic, Susan's going to come up and talk about some of the work the company's done recently, especially on our initiative on wages under the focus of the company more and more outside of our commercial success is how can we do more than sell clothes. Susan will also address shareholders. To get the meeting started, I'm going to introduce Michelle Banks.
Thank you, Glenn, for calling to order the annual meeting of shareholders of Gap Inc. Good morning and welcome everyone. I'd like to ask you all to please turn off your cell phones or any other electronic devices at this time. Today's meeting is being webcast, the webcast will be recorded and available on gapinc.com. Those participating by webcast will be in listen-only mode. Those attending in person can find the rules of this meeting at the bottom of the distributed agenda. We're holding this meeting pursuant to notice mailed to all shareholders of record as of March 24th, 2014. As Glenn said, after the formal portion of the meeting today, we will hear from company leaders, then we will answer questions from our shareholders. Please note there is a two-minute limit for each person addressing the meeting.
John Scheffler of Deloitte & Touche, our independent registered public accounting firm, is also available this morning to answer any appropriate shareholder questions. Please note, only shareholders may ask questions at the annual meeting. We will now vote on the three proposals outlined in our proxy materials. The three items on the agenda are the election as directors of the 10 nominees in our proxy statement, the ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting firm, an advisory vote to approve the overall compensation of the company's named executive officers. We have received an affidavit of mailing of notice of the annual meeting of shareholders from Broadridge Financial Solutions. This states that notice of the meeting has been mailed as required and outlined in our bylaws. The affidavit will be filed with the minutes of this morning's meeting.
Andrew Wilcox, on behalf of Broadridge Financial Solutions, is here and acting as the Inspector of Elections for the meeting. Andrew tells me that a count of shares represented by proxy shows that we have a quorum to conduct business this morning. Before we vote on the three proposals, are there any shareholders who would like to vote in person or would like to turn in or change their proxy? If so, please raise your hand at this time and we will help you. There's no need to vote if you've already voted by proxy. I see no hands, we will proceed with the three items of business before the meeting this morning. The first proposal is the election as directors of the 10 nominees named in our proxy statement.
The second proposal is the selection of Deloitte & Touche as our independent registered public accounting firm for the fiscal year ended January 31st, 2015. The third proposal is the advisory vote to approve the overall compensation of the company's named executive officers. The polls for the three proposals before the meeting are now open. Again, if you would like a ballot, please raise your hand at this time. The polls for each proposal before the meeting are now closed. Andrew, can you give me your preliminary report, please? The 10 nominees for director listed in the proxy statement have been elected. The selection of Deloitte & Touche as the company's public accounting firm has been ratified. The advisory vote to approve the overall compensation of the company's executive officers has been approved.
The final report of the Inspector of Elections will be filed with the minutes of the meeting. The voting results will be filed on a Form 8-K. This concludes the formal portion of the meeting. The annual shareholders' meeting is now adjourned. In a moment, we will hear from Sabrina. Before I hand the meeting over to Sabrina to discuss our company performance, I want to take this opportunity to address some administrative matters. The information in the remaining portion of today's meeting may contain forward-looking statements. There are important factors that could cause our actual results to differ from these forward-looking statements. Information regarding factors that could cause results to differ can be found in our annual report on Form 10-K for the fiscal year ended February 1st, 2014, which is available on gapinc.com.
In addition, the information in the remaining portion of today's meeting includes the non-GAAP measures free cash flow and net sales growth on a constant currency basis. The description of or reconciliation to GAAP of these financial measures is included in the company's February 27th, 2014 earnings press release, which is also available on gapinc.com. As a reminder for shareholders attending the meeting in person, questions will be answered at the end of today's presentation. Sabrina.
Good morning, everybody. Thank you for joining us today. I'm pleased that we completed another year of solid performance in 2013. Specifically, last year, we grew our net sales to over $16.1 billion. In line with our strategy, our revenue mix shifted toward our higher returning channels, especially online, which grew 21% for the year. Both our operating margin expansion and our EPS growth rate were greater than just about all of our competitors. Zooming out, over the past five years, we've increased our net sales by $1.6 billion and expanded our operating margin by 260 basis points. Over that same time, we've grown earnings per share at a 15% compound annual growth rate, despite macro factors like cotton and currency that have created more headwind than tailwind.
Additionally, we generated over six billion in free cash flow and distributed two billion more than that, or nearly $8 billion through share repurchases and dividends over that same time period. As a result of our performance, we're pleased that our five-year total shareholder return is well above the S&P 500 average. Enabling that performance is our strategy to grow our portfolio of brands across multiple channels and geographies. Our experience with multiple channels and their interaction with one another is a real competitive advantage that we will continue to build upon. Further, we believe the retail environment is shifting. There's no doubt that the importance of online and mobile will continue to grow. It's critical that we look at growing our brands holistically across all of our channels. As you've heard us say before, our outlet, online, and franchise channels have higher returns than our specialty channel.
We've successfully shifted contribution into these higher returning channels, growing outlet, online, and franchise to 31% of our business. This is a full 12 points higher than in 2008, and we expect this mix shift to continue over time since customer demand is naturally moving that way. Let me just do a quick review of our financial model and how we drive value for our shareholders. As measured on a full year basis, we plan to drive revenue growth with healthy merchandise margins and leverage our expenses to drive operating margin expansion. As always, we remain committed to returning excess cash to our shareholders. As evidence of our commitment, over the past five years, we've generated an annual average of $1.7 billion in operating cash flow and $1.2 billion in free cash flow.
Over that same time period, we've returned an average of $1.6 billion per year, our philosophy regarding our distributions remains unchanged. Specifically regarding dividends, we look to increase our dividends as net earnings increase, keeping our yield and our payout competitive. Looking at our track record, we've increased our annual dividend by a compound annual growth rate of over 25% since 2004 to $0.88 per share currently. Regarding share repurchases, since 2004, we've repurchased about 630 million shares at an average price of under $21 per share, which equates to buying back over 50% of our shares outstanding. Our stock price at the end of 2013 was 84% higher than our average repurchase price. In conclusion, we're pleased with our accomplishments, but we're fully aware that it's about delivering consistently for our shareholders into the future.
We are totally committed to delivering another year of solid performance in 2014. Thank you very much.
I'm back. Let me take you through the company's mission and the four global initiatives that Gap Inc. and its management team have committed to drive even further shareholder value than Sabrina just took you through. I think it was a couple of years ago, we presented our mission as a business, which is to be the world's favorite for American style. What's changed on that mission from, say, five years ago, is that five years ago, the world came to us because we were in seven countries in 2007, and now we go out to the world because we're in 50 countries. That's important given the growth opportunity for Gap Inc. and all its portfolio brands in a lot of developing countries and countries in which we did not have a presence in just a mere seven years ago.
This mission of ours is going to be achieved through a new way of approaching the business, which is looking at countries that make sense for us to grow our brands and expand our footprint, and equally importantly, our mobile presence and our digital presence in those markets. American style is very important to who we are in our business. The reason we believe we can be the world's favorite is we cover the continuum of what American style can be defined as between the value business, Old Navy, which Stefan Larsson runs for us, all the way to the Intermix business that Art Peck oversees for us. We have broad coverage on different customers in different countries, especially in this country, who want to buy American style.
There's a lot of mixing and matching that takes place between value all the way to luxury, and our brands cover that continuum. The second thing I want to mention when it comes to American style, these trends continue in our business. There is a further trend towards even more casual wearing. You can see that starting this year with a lot of trends coming where people are reinventing the famous sweatpant that I used to wear back in college in 1984. Casual wearing is coming back more and more, and that plays to such a strength for Gap Inc., because every one of our brands, from Banana Republic to Old Navy to Gap brand, can participate in these trends. It's just right at the center of the plate of what American style is all about.
The outcome we're looking for as a business as we execute this mission of ours is we have a goal to be the number one global apparel company in the world. That's our goal. We're in the middle of the pack right now of four global players, all with very strong positions around the world. We believe, given one of the competitive advantages Sabrina mentioned, the fact that we diversify into different channels. Customers want to buy our product, whether it's in a specialty store, whether it's in an outlet center, whether it's in a power center or value center in certain countries, and most importantly, digitally. We have a strong foothold in all three of those channels that give us a competitive advantage on our goal to becoming number one.
Second thing is, in our portfolio of six brands, we have three global brands, arguably iconic, all three of them. Athleta, to my left, is the brand that's becoming our fourth brand. Unlike anybody we compete against to get to this position of the number one global retail player in the world, is we have a diversification again. In this case, it's diversification of our brands. Our number one brand, Old Navy, only has 40% of all of Gap Inc.'s volume and sales. The opportunity to use all four brands through these unique channels to get to this goal is how we're going to approach the achievement we're going to measure ourselves on over the next couple of years. To get to that, businesses need plans, they need initiatives, and we clearly have ours.
Sitting on a foundation, that's that blue bar at the bottom, on a foundation of people, innovation, and a commitment to results. That's what the management team who's here today. We know we can't do this without the best people and the best talent in the industry. We have very great talent today at Gap Inc. Innovation with the changing in consumer and the paradigm shifts that continue, we need to be even more innovative than we are today. We have history of great innovation. I think we need to follow that up and not rest on our laurels and provide even more innovation to our customers every single day, and results, as you heard Sabrina talk about.
The four Global Initiatives that we're going to put in place and have been working on for the last six months to get to our goal is Global Growth, Omnichannel, a Responsive Supply Chain, and Seamless Inventory. Global Growth is really rooted in our investments in China, our investments at Old Navy International, our investments in Athleta, and our online business, led by Art and the team working with the brand presidents to get even stronger business in digital and appealing to the millennial consumer. Secondly, our Omnichannel business is looking at the world through our lens. We're not a pure play. We've historically been a physically based business with our 3,600 stores corporately owned and franchised around the world. We are very quickly building a bridge between physical stores and the digital world. That's going to be the winner long term.
The company that can do that is the company that's going to get the prize and will propel themselves and put themselves on a path to be the number 1 company. Whether it's little initiatives and tools like Reserve in Store that we introduced about six months ago, that's, again, building the bridge between a social digital customer and the physical stores we have. The business that can do that and all the investments and initiatives we have under Art's leadership on Omnichannel will get us there. Third is Responsive Supply Chain. I highlighted Sonia earlier. This is really a big, bold move for Gap Inc. going from what has historically been a cost model. We have been very focused, how do we get the lowest cost on our goods into our stores to maximize gross margin dollars?
In order for us to get to an even better operating margin, which I'll talk about later on, we need to pivot from not giving up on cost and cost still being a focus, but introducing more speed into our supply chain. Lastly, we need to have a Seamless Inventory model. Today, the problem with our model is inventory doesn't move between countries, doesn't move frequently between distribution centers, and never moves between stores. These four initiatives, the last two being enablers to create value in the business that we can reinvest in the first two. That's why I think it's a very good balance of initiatives that allow us for more value, gross margin dollars to be created through Responsive and Seamless to be invested into Omnichannel and Global Growth. Just quickly through this.
Today, and what shareholders should care about, while those initiatives sound good and they are balanced between customer-facing and behind-the-scenes value creation, what is it going to do to the operating margin and to shareholder value for Gap Inc.? This is illustrative because Sabrina would never let me show anything that is not illustrative. Hopefully that was in the forward-looking statement you put out, Michelle. Illustratively, this is where our operating margin is today. It is about 13%. With global growth, there are three key drivers of value. Let me just talk about a leveraged economic model. I think our management team, over the last five to seven years, have done a very good job having a lean economic model, which means every incremental dollar in sales goes through the P&L at a high profit level.
As we get to global growth and push on those four key areas, worth repeating, China, Old Navy International, Athleta, and more online growth, higher than market average online growth, that leveraged economic model goes right to the bottom line. On omnichannel, again, just some examples of how the omnichannel initiative drives shareholder value, I want to talk about the last one, just store productivity. As we build the bridge between digital and physical, one of the opportunities for us is to never walk a sale inside of our stores. Today, we walk too many sales. That is because either a customer cannot find, this is when they are in our physical manifestation of our brands, or they cannot find the product they want. It could be a sizing issue. It could be a color issue.
Now with technology, in the month of June, we are going to be testing and roll out in half of our fleet in the U.S. in September, the ability for all of our store associates with a device connected digitally to close the sale when we disappoint a customer. That is going to be incredibly helpful to store productivity. Responsive supply chain. Again, a list of ways to drive value. Let me just focus on regular price selling. A more responsive supply chain, getting closer to customer needs, using test and respond and other tools that we are looking at within our brands will allow us to sell this suit, monogrammed, by the way, Banana Republic monogrammed suit at regular ticket price. Huge opportunity for us as a business.
I know when I always look at our company or I worked in past businesses, I always try to assess what is the opportunity. Is there more that you can get from the business? The amount of product we sell at regular price is not acceptable. Responsive supply chain is a means to get to that and drive more economic value for the business. Lastly, seamless inventory. Tom Keiser is here, Tom is leading this for us. This is about getting that stranded inventory. It is the bane of the apparel business is inventory that gets stranded. We can get at it by country. Maybe inventory was planned to go to Japan, it should be in China. We can get at it by distribution center. It was planned to be in the East Coast, it should be in the West Coast.
We can start moving it in the fall of 2015 as this initiative starts to get more traction between stores and drive real value for the business. Last slide I want to talk to you about is that's all commercial. You heard from Sabrina speak about the company's commercial success, 15% compounded annual growth rate on earnings per share the last five years. There's another side to Gap Inc.'s personality, and that's what we believe, what we stand for. A lot of that, as Bob Fisher comes and addresses shareholders, has been passed down to us from the family. Everybody here in management here, look, either you love retail, you love fashion, you love to compete, but it's nice to work for a company that actually cares about giving back, cares about their employees, cares about their community.
It's always worth noting, we're not a perfect company. We're not. We operate in 50 countries. We source in 40 countries. We are doing everything we can to make sure we become a better company every single year. With the people that we have, the talent we have, and the commitment to do more, as Don Fisher said, "Do more than sell clothes," many years ago. That's something that's foundational to the belief of everybody who works at Gap Inc. To build on that point, let me bring to the stage Bob Fisher.
Thanks, Glenn, and thank you for your leadership over the last seven years. It's been a wonderful thing, I think, for all of us as board members to watch this company transform and to accelerate, and we owe a lot of gratitude to you. Adrian, also, I'd like to echo Glenn's comments. 19 years of serving on the board with you has been a wonderful experience. I've looked on to you as a mentor, and your contributions to this company have been remarkable, so thank you very much. It's my pleasure to join you here today as a board member and as someone representing our family. As you know, the family remains one of the largest shareholders of the company, and it's with a sense of pride and excitement that I speak to you today about the accomplishments and the opportunities that I and we see ahead for this business.
My mom is listening on the phone today. We have something in common at the moment. That's a cold, and she felt it would be better to stay at home and recover, but I just want to welcome her to this call and to tell her that we miss her. We remain, along with my brother Bill and my brother John, who I don't believe is here today, one of the strongest advocates and champions for this company. It's, again, a wonderful thing to see the kind of progress that's happened over the last seven years. My dad, Don, who passed away nearly five years ago and taught us all that succeeding in retail comes down to understanding the customer and anticipating where the customer is going and not being afraid to change.
He did say, "Let's do more than sell clothes," but he sure as heck cared a lot about selling as many clothes as we possibly could. Glenn described today some of the initiatives that demonstrate that the company is changing and determined to continue innovating and staying ahead of others, staying ahead of the pack. We've got very intense and strong competitors out there, but I think the things that we've put in place over the last several years will continue to elevate this business. Our family's very proud of what the company has become and what we stand for. This year, we celebrate, as Glenn mentioned, our 45th anniversary. I'm looking forward to the 50th anniversary, which is a remarkable thing for an apparel retailer. When you think about how long companies last in this business, this is a treacherous business. It's a volatile business.
It's fun as hell, but it's tough. To the idea that I know we will be there at the 50-year mark, it's a remarkable achievement, and we owe that achievement to all of you, to all of the employees and the shareholders, but mostly to the employees who've gotten us to where we are. When Glenn describes our goal of being the number one apparel retailer, I have the utmost confidence that we're going to achieve that goal. We have an incredibly strong management team. We just got out of a compensation committee meeting, and one of the things that impressed me the most has been our ability to give people global experiences.
We are seating the senior level of this company and management with people that have had not just experience in the U.S., but I would venture to say that there's not a company in apparel retail that has the number of people at the VP level and above that have had global experience. I think Allison DeMille just mentioned that in the Gap leadership team, I think it's around 50% of the population of senior leadership is non-American, and all those people have obviously had experience outside of the U.S. I suspect that the half that are American have had a lot of experience outside of the U.S. When we look long term about our ability to deal with competition and to deal with a changing global consumer, I think that the kind of senior leadership talent that we're developing is really second to none.
You look at the opportunities that are ahead of us. We have Old Navy opening this year, has opened this year in Shanghai and exploring Mexico. We have our franchise business thriving. We have new brands like Athleta and Intermix just beginning. We have the pioneering innovations that bridge the digital and physical shopping experience in Gap and Banana Republic and other brand customers. I really think there's nothing that can stand in our way. During this time, our returns have been incredibly impressive for shareholders. If you invested $1,000 in Gap stock in 1976, that would be worth $370,000 today. That's a number we should all be proud of, and that's a bit of the legacy that we all carry forward.
As Glenn Murphy mentioned, from day one of the things that set this company apart has been our values, our commitment, as Don Fisher said, to do more than sell clothes, but to sell a lot of clothes. Those values have translated to how this company is run with ethics and integrity to the core. It shows up in how we're regarded in our commitment to corporate social responsibility. I've seen this company's standing within that community rise and rise. We are now ranked number three. This is one of the things I think we should all be incredibly proud of. We are ranked number three as the strongest American company in terms of corporate citizenship, and that's across all industries. We should all take incredible pride in that, and I think it keeps us together as a business.
We unite around selling clothes, and we unite around our ethics and our values. It shows up in the people that work here and how they view this company. It's really a sense of pride I think we all share, and it's our secret weapon with the competition. I think we're very humble about this. I think we are generally very humble about many things. I think it's awfully nice to be recognized by independent groups, in terms of the standing that we have as a business and as a company. Another thing that has been perhaps among the most important things is that I think we treat our employees well. The team is the most important thing. Glenn Murphy talked about people, innovation, and results. Well, innovation and results don't happen without our people.
For that reason, Glenn Murphy and the leadership team made the announcement, the bold step in February, that we would raise the minimum wage for all employees to $10 an hour by 2015. We didn't have to wait for federal legislation or for Congress to tell us to do that. It was quite simply the right thing to do, and it was the right thing for the employees and for our business. As a shareholder and board member, I'm confident the company will realize a great return for investment on this in terms of employee retention, customer satisfaction, and store productivity. Because of that, it's my pleasure now to invite to the stage a leader of the company who manages our Banana Republic specialty fleet of more than 400 stores around the company. She first joined us in 1988 as a store manager.
She left for a while and then came back. She's been back with us for 13 years, and some of the strongest advocates for this company are the ones that have gone outside having worked here. We love having them back because they recognize the grass isn't greener on the other side. With that, I would like to introduce Susan Goss Brown, who will speak to us on behalf of the 65,000 employees who will benefit from the minimum wage increase. Thank you very much.
Good morning. Thank you, Bob. I'm really honored to be here representing the 90,000 employees across America and across all six of our brands. 70% of those employees will start to benefit from our wage rate increase that we begin to implement next month. As you heard Bob say, I joined this company as an assistant manager in a Southern California Gap store over 25 years ago. Gap really did help give me the start to a career that has taken me around the country and across multiple brands. It really is a place where you can get your first job and grow that into a long and lasting, and successful career. The opportunities have been endless. This is why when I first heard the news about the wage rate increase, my innate response was pride.
I knew instantly that we were a part of a very special moment in our company's history. It was proof to me that I worked for the most influential, caring, and provocative retailer around. With this decision, we were all living up to Don Fisher's dream of do more than sell clothes. Beyond the direct impact to so many across the country, this really was about Gap Inc. standing up for people. It's a reminder for me really of the power this company has to improve the lives of thousands of employees and their families. This is proof that we're so much bigger than one store, so much bigger than one brand. We really are Gap Inc. We don't just sell clothes here. We take care of people. We help them grow, and we help them become successful. I see it happen every day.
I'm an example of it, as are many of the employees in this company who've been here and grown up here. I also know from firsthand experience that our frontline employees, the women and men who serve our customer every day, are critical in our push to become the number one global retailer. We believe that this investment in our workforce will improve our competitiveness and strengthen our ability to attract and retain a skilled, enthusiastic, and engaged workforce, which will yield dividends for our business in the future. That said, the benefit of this decision goes way beyond money, way beyond dollars. Every day, I'm fortunate enough to be able to visit stores. I get to interact with the 65,000 employees who will ultimately benefit from the wage rate increase.
There's an employee in Nashville who cried when she first heard the news of this because she personally had just experienced a pretty significant financial hardship. The increase had not only given her hope that she would overcome her situation, but now she wants to start a career with Gap Inc. There are those people who are drawn to us because of what we stand for. This decision helps us to attract and retain the best in retail. As we all know, people are our competitive advantage in this business. There's Olivia from Winston-Salem, who actually read about the wage rate increase in the media and left her previous employer, Victoria's Secret, to come work for us. She said she wanted to work for a company that offered global growth for their employees across multiple brands.
There's the mother who stopped into one of our Banana Republic stores recently to pick up an application for her daughter. She had seen President Obama shopping in our store in New York and wanted her daughter to work for an organization that invested and believed in people. She actually shopped a little bit. She bought some things. She said she was happy to give back to a company that gave so much to their people. Stories like these are examples of the pride in this company and the belief that we are positioned to be a leader and not a follower. We lead and we care about having a positive impact on the lives of people around the world that we touch because those are the values that Doris and Don imparted in this company 45 years ago. From empowering women in our Gap Inc.
PACE program, to creating opportunities for young people to gain skills so that they can get and keep a job, to the hundreds of thousands of hours that our employees actually volunteer annually. Taking a stand and making a difference is a part of our DNA. These are the issues that we care about, and we've been working to address them since Doris and Don opened our first store on Ocean Avenue. It is what Don meant when he said, "Do more than sell clothes." We are proud to do more for our employees, our customers, and our communities every day. Thank you.
Thank you, Bob. Thank you, Susan. We'd now like to open up to any questions from shareholders. Yes, ma'am.
Thank you. Should I stand out here? Okay. Good morning. My name is Anne Kellogg. I'm a senior corporate liaison with PETA, People for the Ethical Treatment of Animals. I have a question regarding Gap's stance on sourcing angora rabbit fur. angora comes from rabbits who have extremely soft, thick coats, and it's used in various apparel products from gloves to scarves to sweaters. Last year, a PETA Asia investigator documented workers violently ripping the fur from rabbits' sensitive skin while they scream at the top of their lungs in pain. This terrifying and barbaric procedure is repeated every 90 days. One farmer admitted that about 60% of rabbits often die within two years, often because they can't keep their bodies warm enough or because the stress endured causes them to suffer fatal heart attacks.
Farmers pluck the rabbits while they're still alive because the fur grows back, and they want to produce the greatest volume in the cheapest way possible. This is standard practice in China, where there are no penalties for the abuse of animals and there are no regulations that govern their treatment. Also, 90% of the world's angora is sourced from China. When not being plucked, rabbits spend their entire life in complete isolation in cages that are not much bigger than their own bodies. They're also completely isolated from other rabbits, which is psychologically devastating to rabbits that are highly social animals. Fortunately, angora usually accounts for only a small percentage of the garment makeup. Replacing it with non-animal materials that mimic angora's softness is very easy and accessible and eliminates any animal suffering.
Gap has said that it has no plans to source angora and is working with industry experts to understand the issue better. However, as of yesterday, you were selling angora on the Gap, Old Navy, Piperlime, and Athleta websites, and you've left the door open to source it again in the future. Any statement you've said up to this point is meaningless. The only acceptable statement is that you will remove angora from your shelves and commit to stop sourcing it permanently. Gap lags behind many other global retail giants that have permanently banned angora, including L Brands, Perry Ellis, Zappos, Anthropologie, Eddie Bauer, Forever 21, Limited Brands, Calvin Klein, Mango, H&M, Express, Boden, Tommy Hilfiger. The list goes on and on. Knowing about the immense suffering that goes into every angora product, you must take the only logical next step, which is to ban angora permanently.
My question-
Excuse me, do you have a question? You're well over your two minutes.
Thank you. My question is, when will Gap stop sourcing angora permanently?
Great. Thanks for your question. Thank you. Because every now and then we have groups we work with, whether environmental side or whether it's PETA, who bring issues like this to our attention. We were made aware of it, although we knew there were some issues taking place last year. We were made aware of it. We stopped buying any angora going forward. I know that you're looking for a ban. The position we've taken is we will no longer source any angora going forward. I'm disappointed to hear it's still on the website, which points to actually a bigger problem. I know going forward, we will not be sourcing any angora is the position the company's taken. There's other issues we continue to look at.
I'll definitely look into the fact that you're saying it's still on the website, because that's disappointing to hear that because our intention was to definitely not source any more in December than move it through our pipeline. I'll check into that. Thanks for bringing that to my attention. Any other questions, shareholders? Okay, seeing as how there's no further questions, thank you for your time today. We look forward to seeing you in May 2015, where we can give you a further update on the company's strategic progress, hopefully present another solid financial report as Sabrina did today.