Shares fell 4 percent to $10.90 from their close of $11.35 on the New York Stock Exchange.
The San Francisco-based company is in the midst of a turnaround effort as it tries to improve its product, stores and merchandising to recapture the loyalty of consumers who have gravitated to rival brands in recent years.
Earlier on Thursday, Limited Brands Inc
Net income in Gap's fourth quarter fell 8 percent to $243 million, or 34 cents per share, from $265 million, or 35 cents per share, a year earlier. Analysts had expected earnings per share of 32 cents, according to Reuters Estimates.
As previously reported, revenue fell 13 percent in the key holiday quarter to $4.1 billion, while same-store sales, a measure of retail financial performance, fell 14 percent.
Hardest hit has been Old Navy, the company's lower-cost chain, where same-store sales fell 17 percent in the quarter.
Gap, which also operates the Piperlime online shoe store and the recently acquired Athleta active-wear brand, has been focused on maintaining profit margins during the transition.
Gross profit as a percentage of sales was relatively flat from the year-earlier quarter and operating expenses fell by 18 percent.
Our ability to drive healthy margins and achieve significant cost savings helped us deliver earnings growth of 16 percent over the course of a very challenging year, Chief Executive Glenn Murphy said in a statement.
Murphy cited the $1.8 billion in cash the retailer had at the end of the fiscal year, which ended January 31.
For the first quarter, Gap said it expects operating expenses to be reduced by a range of $10 million to $30 million.
Gap said it expects inventory per square foot to be reduced in the current quarter by a percentage in the high single digits -- not as sharp a rate as the year-earlier first quarter when inventory per square foot was cut 17 percent.
In the current tough environment, retailers have been trying to control their inventory to avoid major markdowns if product does not sell.
Capital expenditures are expected to be about $350 million in fiscal 2009.
(Reporting by Alexandria Sage; editing by Leslie Gevirtz, Gary Hill)