Specialty clothing retailer Gap Inc today booked a 4% drop in January comparable sales as it took steps to clear merchandise - and lifted its fourth quarter earnings guidance.

The San Francisco based retailer said net sales fell 1% to $833m in the four weeks to 28 January, compared with $843m in the same period last year.

Comparable sales - including online sales - in its north American operations fell 5% at Gap, rose 6% at Banana Republic, and dropped 6% at Old Navy. International same-store sales fell 10%.

"January was largely clearance-based, and we're pleased we successfully cleared holiday inventory," said Glenn Murphy, chairman and chief executive officer of Gap Inc. "As we transition to a new year, our teams are focused on making the necessary steps to improve our business performance in 2012."

The company also said net sales in the fourth quarter fell 2% to $4.28bn from $4.36bn, with comparable sales down 4%. And for the full year, sales fell 1% to $14.55bn from $14.66bn, with a 4% drop in comparable sales.

But it expects diluted earnings per share to be in the range of $0.41 to $0.42 in the fourth quarter, above First Call consensus of $0.35.