San Francisco -- Gap Inc. reported Thursday that net income for the fourth quarter plummeted 40% on higher costs and aggressive discounting during the holiday selling season.
Net income for the quarter ended Jan. 28 was $218 million, compared with $365 million a year earlier. Sales dipped to $4.28 billion in the quarter, from $4.36 billion, matching Wall Street estimates.
Same-store sales fell 4%. By division, same-store sales fell 3% at Gap North America, and 6% at Old Navy. Banana Republic's domestic same-store sales were unchanged compared with the year-ago period. The international division had an 8% decline.
For the full year, profit declined 17% to $833 million. Sales dipped 1% to $14.5 billion for the year, and same-store sales were down 4% compared with a 2% increase last year.
“In spite of 2011 earnings being below last year, we’re pleased with the progress we made against our long-term strategic plan, including growing our online business and expanding internationally,” said Glenn Murphy, chairman and CEO of Gap Inc. “There’s no doubt that improving our performance, especially in our base businesses, is the top priority in 2012, and we’re confident this is the right time to invest wisely to win back customers.”
In fiscal year 2012, the company said it expects to open about 125 company-operated stores, net of repositions, 55 of which are international. About 115 company-owned stores are slated for closure.