Net sales in the five weeks to January 3 fell 12 per cent against the previous year to US$2.2 billion (£1.45 billion).
Comparable store sales at its Gap fascia fell 12 per cent for the period. At Banana Republic and Old Navy, sales fell 15 per cent and 16 per cent respectively. Sales at its international stores slid 5 per cent.
Chief financial officer Sabrina Simmons said that customers waited until late in the month to make purchases and said Gap faced a tough, highly promotional environment.
“We responded aggressively across our brands with compelling offers, which helped us clear through a significant amount of holiday inventory, but resulted in merchandise margins below last year,” said Simmons.
In the 48 weeks to January 3 net sales at Gap were US$13.77 billion (£9.05 billion), a drop of 7 per cent compared with the year before.