Gap’s third-quarter profit falls 36%

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Struggling apparel giant Gap Inc. reported another lackluster quarter, with a 36% decline in profit and diminishing sales at its Gap and Old Navy chains.

For the three months ended Oct. 29, the San Francisco company -- parent to the Gap, Banana Republic and Old Navy brands -- said its third-quarter profit dropped to $193 million, or 38 cents a share, compared with $303 million, or 48 cents, a year earlier.

Sales fell to $3.59 billion, a 2% drop from $3.65 billion in its third quarter in 2010. Its comparable sales, which include online sales as well as at sales at stores open at least a year, were down 5%.

The retailer announced last month that it plans to close nearly 200 stores and downsize others in North America as it looks to expand internationally. The company plans to shave the number of Gap brand stores to 700 by the end of 2013, a 21% decrease from the 889 it operated at the end of July.

Gap also said it was scaling back some of its Old Navy stores. That brand’s store count is expected to stay about the same, but its locations will continue to downsize through store remodels, through relocation and by leasing space back to commercial real estate landlords.

“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,” Glenn Murphy, Gap’s chairman and chief executive, said in a statement.

Looking forward to the holiday season, Murphy said Thursday that the company’s ‘state of readiness is very high.’

‘Everything we didn’t do right in Q3 is absolutely correctable and will be corrected,’ Murphy said in a conference call.

The retailer reiterated its full-year guidance of $1.40 to $1.50 a share.

Shares fell 23 cents, or 1.2%, to $19.25 during regular trading. Earnings were reported after the close of regular trading.

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Old Navy T-shirts arent spelled right. We mean aren’t.

-- Shan Li