Gap Suffers Weak Profit From Fast-Fashion Competitors

Apparel retailer Gap Inc's full-year profit forecast fell short of analysts' estimates, as it struggles with a strong dollar and weak sales in its Banana Republic and Gap brands.

The company's shares fell 4.6 percent to $26.32 in extended trading on Thursday.

Gap said it expected an adjusted profit of $2.20-$$2.25 per share for the full-year ending January 2017, way below the $2.42 analysts on average were expecting, according to Thomson Reuters I/B/E/S.

The forecast includes a pre-tax impact of over $120 million from a strong dollar, which has been plaguing U.S. companies with significant global presence.

Gap and many U.S. apparel retailers are also bearing the brunt of customers flocking to fast-fashion retailers such as H&M, Forever 21 and Inditex's Zara.

Nomura analyst Simeon Siegel said the environment is very promotional and it's not easy to "snap your fingers" and come out of the situation.

Gap's net income fell by a third to $214 million, or 53 cents per share, in the fourth quarter ended Jan. 30.

Excluding items, the company earned 57 cents per share, in line with the average analyst estimate.

Revenue figure was unchanged from the $4.39 billion the company provided on Feb. 8.

Gap also announced on Thursday a new $1 billion share repurchase program, replacing an existing authorization.

Up to Thursday's close of $27.6, shares had fallen about 10 percent this year. (Reporting by Subrat Patnaik in Bengaluru; Editing by Sriraj Kalluvila)