Gap quarterly profit falls, to close more stores

SAN FRANCISCO (Reuters) - Gap Inc (GPS.N) on Thursday posted a lower fourth-quarter profit with a steep drop in sales and said it would close additional stores, especially at its namesake Gap chain, as it tries to weather a recession.

The operator of the Gap, Banana Republic and Old Navy chains said it plans to close 100 stores in fiscal 2009 out of more than 3,100 locations. It expects to open about 50 new stores during the year, with about half outside the United States and the remainder focusing on outlet stores.

Shares fell 4 percent to $10.90 from their close of $11.35 on the New York Stock Exchange.

The San Francisco-based company is in the midst of a turnaround effort as it tries to improve its product, stores and merchandising to recapture the loyalty of consumers who have gravitated to rival brands in recent years.

Earlier on Thursday, Limited Brands Inc (LTD.N) reported a sharp drop in net profit as it wrote down the value of its La Senza lingerie chain and forecast a first-quarter loss that had not been expected by Wall Street. Its shares fell 13 percent.

Net income in Gap's fourth quarter fell 8 percent to $243 million, or 34 cents per share, from $265 million, or 35 cents per share, a year earlier. Analysts had expected earnings per share of 32 cents, according to Reuters Estimates.

As previously reported, revenue fell 13 percent in the key holiday quarter to $4.1 billion, while same-store sales, a measure of retail financial performance, fell 14 percent.

Hardest hit has been Old Navy, the company's lower-cost chain, where same-store sales fell 17 percent in the quarter.

Gap, which also operates the Piperlime online shoe store and the recently acquired Athleta active-wear brand, has been focused on maintaining profit margins during the transition.