Deep discounting and escalating production costs pushed Gap\'s second-quarter profit down 19 per cent, raising concern about how the nation\'s largest clothing chain will fare during the critical fall and holiday shopping seasons.Gap, which operates Gap, Old Navy and Banana Republic chains, on Thursday posted much weaker results than many of its peers. Several major merchants reported profit increases last week and said they\'ve been able to push through price hikes to shoppers as they try to offset their higher costs for labor and raw materials.The San Francisco-based retailer, which has been struggling for several years, has been particularly hard hit by the down economy. Its Gap chain, in particular, has posted an annual sales drop in the last six years at stores in North America open at least a year, a key measure of a retailer\'s health. Recent stock market turmoil and fears of another recession only compound the retailer\'s troubles at a time when it\'s trying to revive its brands. \"We\'ve been very clear internally and externally,\" Glenn Murphy, chairman and chief executive, said during a conference call with investors. \"Our goal is to have moderate, steady growth in our domestic business and we\'ve not achieved that.\" In the second quarter, the chain\'s overall revenue at stores opened at least a year fell 2 per cent during the quarter.By division, Gap\'s domestic business was down 3 per cent, while Banana Republic posted a 2 per cent decline. Old Navy\'s domestic business was flat. The company\'s international division posted a 4 per cent drop from a year ago.The company marked down its merchandise to draw customers into stores, which hurt profit. The company earned $189 million, or 35 cents per share, in the three months ended July 30. That compares with $234 million, or 36 cents per share, a year ago. Revenue rose 2 per cent to $3.38 billion. From / Gulf News