NEW YORK (CNN/Money) - Shares of Gap Inc. fell Friday, a day after the company posted a fourth-quarter profit but declined to give guidance for the first quarter and the full year.

Gap (GPS: down $1.67 to $13.15, Research, Estimates), the No. 1 U.S. specialty retailer, was down about 10 percent on the New York Stock Exchange. Also adding pressure were a few downgrades on the stock.

"The stock's taking a hit this morning because the company was cryptic about it's outlook going forward," said Todd Slater, retail analyst with Lazard Freres & Co.

"While we think the new management team is focused on reinventing the company, the first quarter is off to a hazy start and prospects for the rest of 2003 look even fuzzier," Slater said.

Slater cut his rating on Gap to "hold" from "buy," while Bank of America Securities downgraded the stock to "neutral" from "buy," saying that at current price levels it thinks expectations are relatively high.

The San Francisco-based company logged a fourth-quarter profit Thursday that met Wall Street expectations and reversed a year-earlier loss but also warned of a February shortfall in same-store sales -- or sales at stores open at least a year -- blaming bad weather and dwindling consumer confidence.

"These results are somewhat short of our beginning-of-month projections, and while weather was clearly a factor, other reasons for this shortfall are difficult to read," Byron Pollitt, Gap's chief financial officer, said.

But some analysts already spotted a couple of red flags. The company said its inventory is running above expectations because of slow February sales. The worry is that rise in inventory could push down future margins.

Gap's merchandise margins are below last year's levels, while overall company expenses are expected to increase by 10 percent in the first half of the year due to ramped-up advertising and marketing costs. Increases expenses could take a bite out of the earnings push for the rest of the year.

"The company is spending like it's 1999," Slater said. "While the consumer is in a state of partial paralysis, this may not be the best time to put the expense pedal to the metal."

Meanwhile, Gap said its customers also were showing reluctance to buy items at full price, and it has had to lower prices more than expected. The company also announced some store closures in 2003.

Gap has had several consecutive months of improving sales and profit margins recently since it began its turnaround last year.

The stock is up about 60 percent from its low in October, and over the past 12 months analysts said the stock has outperformed the retail index by 39 percent and the S&P 500 by 34 percent.

Slater thinks the long-term outlook for the Gap still looks good in terms of the rates of sales and earnings growth, but the real problem is the lack of near-term visibility.

"The near-term is fraught with more questions than answers," Slater said. "Sales comparisons are likely to toughen dramatically going forward."