Gap net income drops as it discounts merchandise

Gap Inc. said profit fell for a sixth straight quarter after it increased discounts to help clear out unsold clothes at Old Navy and its namesake stores.

Earnings and sales exceeded analysts’ estimates, and Gap said it was close to hiring a search firm to find a replacement for former Chief Executive Paul Pressler. The company plans to open about 230 stores this year, mostly Old Navy locations, and shut about 200 sites, mostly Gap stores.

Fourth-quarter net income fell 35% to $219 million, or 27 cents a share, and sales rose 2.3% to $4.93 billion, San Francisco-based Gap said. Analysts surveyed by Bloomberg had estimated profit of 24 cents on sales of $4.89 billion.

“The positive is there weren’t any negative surprises,” said Keri Spanbauer, an analyst at Thrivent Investment Management in Minneapolis.

Shares of Gap rose 17 cents to $19.20 in after-hours trading.

Gap said profit this year would be 80 cents to 90 cents a share, excluding a 4-cent charge to close its 18-month-old Forth & Towne chain.