Gap reveals 40% drop in quarter profits

Gap reported a 40% drop in fourth-quarter profit as the clothing retailer wrestled with higher costs and had to discount heavily to attract shoppers during the crucial holiday season.

The operator of Banana Republic, Gap, Old Navy and Athleta chains also announced its board approved a new $1bn share repurchase authorisation and approved a plan to increase the annual dividend per share by 11%, from 45 cents in fiscal year 2011 to 50 cents for the current year.