Specialty clothing retailer Gap Inc has lowered its earnings guidance for the year after same-store sales fell 14% in December and margins were hit by lower prices.

The San Francisco based firm said net sales for the five weeks to 3 January fell 12% to of $1.93bn  from $2.20bn a year earlier.

Same-store sales fell across all divisions, with Gap North America down 12%, Banana Republic North America dropping 15%, Old Navy North America falling 16%, and International sales down 5%.

"December was challenging, as customers waited until late in the month to shop and we faced a highly competitive promotional environment," said Sabrina Simmons, chief financial officer, yesterday (8 January).

"We responded aggressively across our brands with compelling offers, which helped us clear through a significant amount of holiday inventory, but resulted in merchandise margins below last year."

For the year-to-date, net sales are down 7% to $13.77bn, and comparable store sales are 11% behind last year's levels.

Looking ahead, Gap lowered its fiscal earnings guidance to $1.27 to $1.30 per share, from earlier estimates of $1.30 to $1.35. Last year's earnings per share was $1.05.

The company also said it repaid $138m of debt in December, leaving $50m of debt outstanding.