NEW YORK (REUTERS) - Apparel retailer Gap cut its full-year earnings forecast as sales at the Gap brand continued to fall and demand for the cheaper Old Navy clothing slowed.

The company's shares fell 4.4 per cent in extended trading on Thursday.

Comparable-store sales fell 5 per cent at Gap in the third quarter ended Nov 1, while sales were flat at Banana Republic.

Comparable sales growth at Old Navy stores slowed to 1 per cent from 4 per cent in the preceding quarter.

Old Navy brand was Gap's strong point in North America even when demand for its premium brands cooled.

The company cut its earnings forecast to US$2.73-US$2.78 per share from US$2.95-US$3.00 per share for the year ending February 2015.

Apparel sales in North America have been slowing as retailers slash prices to attract shoppers at a time when consumers cut back on discretionary spending.

Gap's net income rose to US$351 million (S$456.4 million), or 80 US cents per share, in the third quarter from US$337 million, or 72 US cents per share, a year earlier.