Gap cuts profit outlook after sales fall short

SAN FRANCISCO (AP) - Gap Inc. on Thursday cut its profit outlook for the year after reporting disappointing sales for its third quarter.

The San Francisco-based clothing retailer said sales fell 4 percent at established Gap locations, following a 5 percent drop in the year-ago period. Banana Republic fell 12 percent, after sales were flat a year ago. The bright spot was Old Navy, which saw a 4 percent increase, after a 1 percent jump in the year-ago period.

The company, which is struggling to turnaround its namesake brand, said Gap's leadership team is making progress with a plan that includes "actions to build a smaller, more vibrant fleet of stores."

For the quarter ended Oct. 31, the company earned $248 million, or 61 cents. Not including one-time items, it earned 63 cents per share, which was in line with Wall Street expectations, according to Zacks Investment Research.

Revenue dipped to $3.86 billion, which missed Street forecasts. Analysts surveyed by Zacks expected $3.88 billion.

Gap now expects full-year adjusted earnings in the range of $2.38 to $2.42 per share. Previously, the company said it expected profit of $2.75 to $2.80 per share.

Gap's shares slipped 19 cents to $24.90 in extended trading following the release of the earnings report.

Through the close of regular-session trading Thursday, Gap shares had decreased 40 percent since the beginning of the year, while the Standard & Poor's 500 index has climbed 1 percent.

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Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on GPS at http://www.zacks.com/ap/GPS

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