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UPDATE 1-Gap's quarterly profit beats; says plan to split Old Navy in place

(Adds details, compares with estimates)

Nov 21 (Reuters) - Apparel retailer Gap Inc nudged past tempered quarterly profit expectations and reiterated its plan to separate Old Navy from the namesake brand.

Gap replaced longtime Chief Executive Officer Art Peck with Robert Fisher, a member of the founding family, as its interim head nearly two weeks ago and cut its full-year profit forecast, blaming weak traffic and operating challenges across key brands.

"We continue to make progress against our separation plans, which will provide improved focus and a further catalyst for transformation," said Fisher.

The San Francisco-based retailer, which has long struggled to grow sales at two of its flagship brands, reported net sales that fell 2.2% to $4 billion in the third quarter ended Nov. 2, but still beat the analysts' average estimate of $3.96 billion, according to IBES data from Refinitiv.

"We are not pleased with the third quarter results and are focused on aggressively addressing the operational issues that are hindering the performance of our brands," Fisher said.

The retailer in February said it would separate its better-performing Old Navy brand, giving investors hopes that the standalone company would be able to show better results than the Gap brand.

Excluding items, the company earned 53 cents per share, compared with the analysts' average estimate of 51 cents.

The company earlier this month said it was expecting to earn between 50 cents to 52 cents per share.

Gap's shares, which have fallen 37% this year, were up about 3% in trading after the bell. (Reporting by Nivedita Balu in Bengaluru; Editing by Amy Caren Daniel)