Gap's profit drops 12.5%; outlook trails estimates

Shoppers walk past a Gap store in Chicago.
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Gap is reporting a 12.5 percent drop in fourth-quarter profit on a 3 percent decline in revenue as the clothing retailer was forced to discount heavily over the holiday shopping season to entice customers.

The clothier, which operates Gap, Old Navy, Banana Republic and Athleta chains, issued a profit outlook for the full year that is below analysts' expectations.

The retailer, based in San Francisco, reported net income of $307 million, or 68 cents per share, in the three-month period ended Feb. 1. That compares with $351 million, or 73 cents per share, in the year-ago period.

Gap posted revenue of $4.58 billion, down from $4.73 billion.

Analysts were expecting 65 cents per share on revenue of $4.58 billion for the quarter.

—By The Associated Press