Gap Meets Lowered Expectations; Kmart Disappoints

Updated from 10:58 a.m. EST

Gap(GPS Quote) acknowledged Thursday that its third-quarter profits sank 41%, meeting analysts' lowered estimates, yet the slumping clothing retailer pledged to "fix its problems" and make management changes after a string of earnings warnings.

At the same time, the retail giant Kmart(KM Quote) disappointed Wall Street on Thursday with a third-quarter loss of $67 million, or 14 cents a share, compared with a profit of $27 million, or 5 cents a share, a year earlier. Analysts polled by First Call/Thomson Financial had expected a loss of 10 cents a share.

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