Third-quarter profit at Gap Inc improved by just 1 per cent the San Francisco-based retailer said on Thursday, hampered by weakness at its Old Navy and international Gap stores.

Earnings were $265 million, or 28 cents per share, for the 13 weeks ended 30 October.

The company said reported earnings per share reflects about $10 million of pre-tax expenses related to premiums paid on early retirement of $122 million of debt in the third quarter.

Sales for the period increased 1 per cent to $4.0 billion, from $3.9 billion for the same period last year. Same-store sales were down 1 per cent for the quarter compared with a prior year increase of 6 percent.

Same store sales at Gap US stores grew 2 per cent and grew 3 per cent at Banana Republic. Same stores sales at Gap International dropped 10 per cent and fell 1 per cent at Old Navy.

By division, net third quarter sales were a flat $1.3 billion at Gap US stores, while Gap International sales fell to $440 million from $476 million last year. Banana Republic sales were up to $538 million from $512 million last year, and Old Navy sales rose to $1.7 billion versus $1.6 billion last year.

"We're pleased with our strong year-to-date earnings. For the third quarter, we delivered solid margins and earnings while using our strong cash position to retire debt early and launch a $750 million share repurchase program," said Gap Inc President and CEO Paul Pressler

In a conference call, Pressler blamed the third-quarter sales erosion on higher gas prices and the presidential election campaign which kept some shoppers from the stores.