Retailers report earnings declines

Gap Inc. reported a 40 percent 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 said Thursday that it earned $218 million, or 44 cents per share, in the three months that ended Jan. 28. That compares with $365 million, or 60 cents per share, in the same period last year.

Target Corp. reported that fourth-quarter earnings fell 5.2 percent due to sluggish holiday sales.

But the discounter, which said Thursday that its business has rebounded since then, offered a full-year profit outlook that was above Wall Street estimates.

The company, based in Minneapolis, earned $981 million, or $1.45 per share, in the three months that ended Jan. 28. That compares with $1.04 billion, or $1.45 per share, in the same period last year.

Safeway Inc. said Thursday that its profit slipped 6 percent in the fourth quarter as it paid more to stock its shelves.

As commodity and fuel prices continue to rise in a weak economy, grocers across the industry have been struggling to absorb higher expenses without turning off cost-conscious shoppers.

The Pleasanton, Calif.-based operator of Safeway and other grocery chains said it earned $215.6 million, or 67 cents per share, in the last three months of 2011. That compares with net income of $229.6 million, or 62 cents per share, in the same period last year.