Business Highlights

SAN FRANCISCO — Gap Inc. said Thursday its third-quarter profit plunged 20 percent as the clothing retailer stumbled through its worst sales slump in more than three years.

Compounding the misery, the owner of the Gap, Old Navy and Banana Republic chains warned its woes are likely to continue during the crucial holiday shopping season — a dreary outlook that punished its stock.

The San Francisco-based company said it earned $212 million, or 24 cents per share, for the three months ending Oct. 29. That compared with $265 million, or 28 cents per share, at the same time last year.

The earnings matched the mean estimate of analysts surveyed by Thomson Financial. Analysts lowered their expectations earlier this month after Gap provided an early warning about its struggles.

Sales for the period totaled $3.86 billion, a 3 percent decline from $3.98 billion last year.

In a more telling sign of a merchant’s health, Gap Inc.’s sales at stores open for at least a year fell 7 percent. That represented the largest three-month decline in Gap’s comparable-store sales since the second quarter of 2002 — the tail end of the deepest funk of its 36-year history.

The company’s performance improved following a management shake-up that ushered in former Walt Disney Co. executive Paul Pressler to rejuvenate one of the nation’s best known retailers.

After several years of steady sales gains, Gap began to regress in the spring of 2004 and the deterioration has been accelerating during the past year.

HP profit falls

on restructuring adjustment

SAN JOSE — Hewlett-Packard Co.’s fiscal fourth-quarter profit fell 62 percent after the computer and printer company took a $1.1 billion charge for a massive restructuring it announced in July. Still, the results announced Thursday exceeded Wall Street expectations.

Aside from the one-time expense, all the company’s business units — from personal computers and printers to enterprise servers and software — reported revenue growth. HP also said its profit in the first quarter would surpass current Wall Street estimates.

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Mortgage rates climb: Rates on 30-year mortgages edged up slightly this week, posting the 10th consecutive increase and keeping rates at the highest level in more than two years.

Mortgage giant Freddie Mac reported Thursday that the nationwide average for 30-year, fixed-rate mortgages rose to 6.37 percent, slightly higher than last week’s 6.36 percent average.<