• Q3 profit falls 36% to $193m 
  • Net sales were down 2% to $3.59bn
  • Re-affirms full year EPS

Specialty clothing retailer Gap Inc has reaffirmed its full-year earnings outlook even though a continuing slide in earnings and margins has pushed the struggling firm to a 36% drop in third quarter profit.

The San Francisco based retailer said net income in the three months to 29 October tumbled to $193m or $0.38 per share, from $303m or $0.48 per share the year before.

Net sales were down 2% to $3.59bn from $3.65bn. But comparable sales were down 5%, with declines across all divisions. In North America, same-store sales at Gap fell 6%, Banana Republic slipped 1% and Old Navy was down 4%. International comps tumbled 10%.

"Across our brands, we're intensely focused on improving our current sales trend, including making necessary product and marketing adjustments, with a view toward building momentum as we head into 2012," said chairman and CEO Glenn Murphy. "We're ready to compete aggressively this holiday."

Separately, the retailer said its board had approved a new $500m share repurchase programme, adding to the $2.0bn it has spent on shares in the third quarter alone. The move, it said, reflected its "commitment to returning excess cash to shareholders."

The retailer last month unveiled steps to try to turn its business around, including international expansion and the closure of nearly 200 Gap stores in North America by the end of fiscal 2013, bringing the roster down by more than 20% to 700. It is also downsizing at Old Navy.

Yesterday (17 November) it said it was accelerating its store closures this fiscal year, from 125 up to 150.

The company still sees full-year earnings of $1.40 to $1.50 per share.