NEW YORK (CNN/Money) - Gap Inc.'s glaring December sales miss has many on Wall Street asking one question: What's the retailer doing differently this spring to allay fears that its year-long turnaround is starting to sputter?

San Francisco-based Gap Inc., which operates Gap as well as Old Navy and Banana Republic stores, has been on the comeback trail since October 2002, when the company finally reversed two years of plummeting sales.

After a long struggle, Gap found a winning merchandise and marketing strategy with its fall 2002 "Crazy Stripes" campaign that featured candy-colored striped sweaters, scarves and hats.

The success of "Crazy Stripes" reinvigorated the Gap brand and also mended the retailer's image with its core customers, many of whom felt alienated by the fashion faux pas of moving away from the khakis and knit shirts its customers savored in favor of younger and trendier looks.

Gap's new spring campaign features pastel-colored crop jackets and pants.

Gap's back-to-basics strategy paid impressive dividends: Not only have sales at stores open at least a year grown, but the company has also seen year-over-year profit improvement for the last three quarters. It's due to report fourth-quarter results on Feb. 26.

But the weak sales at the Gap stores unit in December are a glaring problem -- especially since the division accounts for a third of the company's sales and profits.

"Gap clearly was the biggest disappointment of the month," said Brian Tunick, retail analyst with J.P. Morgan. "The company said its holiday markdowns and window displays may not have been as compelling as in previous seasons. But it's tough to think that was the only thing going on."

An overall drop in mall traffic was also part of the problem, he said, noting traffic at Gap stores fell 6 percent in December.

Sales at stores open at least a year slowed considerably during the crucial holiday shopping period for Gap Inc. overall. December sales rose a paltry 1 percent compared with 5 percent growth a year earlier. The result also missed Wall Street forecasts for a 5 percent gain.

The culprit was Gap's domestic stores, which posted the weakest results -- flat versus a 2 percent rise a year earlier. Comparable-store sales grew 10 percent at the high-end Banana Republic stores -- benefiting from a surge in luxury spending -- and 2 percent at the low-end Old Navy division.

Tunick, who has a "neutral" rating on the stock, said that now he's a bit cautious since the retailer will be facing tougher sales comparisons.

Investors have taken note of slowing sales at Gap: the stock has fallen about 19 percent from its 52-week high of $23.47 it hit on Dec. 23.

Some observers say the retailer has set different strategies for its three business units. For Banana Republic and Gap stores, it kept inventories tight and scrimped on deep discounts in a bid to boost profits over the holidays.

But widespread holiday promotions at the value-end Old Navy stores suggest a different focus -- one of growing sales.

"The promotional strategy worked at Old Navy because there are lots of other products" at similar prices, said Adrienne Tennant, analyst with Wedbush Morgan Securities. "There were fewer promotions at Gap but the unit preserved its profit margins."

The retailer operates about 2,273 Gap stores, 843 Old Navy stores and 438 Banana Republic stores around the country.

"Gap is working through its turnaround and still dealing with branding issue and how to reinvigorate its core apparel basics," Tennant said.

Those aren't the only challenges.

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Said Tunick: "Apparel is a very competitive landscape with many more players that can get similar products out faster. Gap's focus should be on building its stock in basics and not chasing fashion novelty."

But if the company's other divisions -- specifically Old Navy -- consistently outperform its namesake unit, could it make sense for the retailer to roll over all its Gap stores into the Old Navy format?

Most analysts think that's not a possibility.

"However, the company's square footage growth is weighted towards Old Navy and not the Gap. The retailer may close more of its Gap stores and expand Old Navy given that there's a higher market in the value segment," said Tennant.

For its part, Gap spokeswoman Erica Archambault said the company has no plans in that direction.

Gap's new spring campaign, expected to hit in early March, will feature models -- not musical celebrities such as Madonna and Missy Elliot, as it has done in the past -- wearing crop pants and jackets in ice-cream inspired colors.

Gap's spring lineup includes this pistachio-colored sweater set.

"It's not funky but a more stylish look for women, almost reminiscent of the Audrey Hepburn era. And we're not abandoning the basics," said Archambault. "We're trying to show people that we're about more than just basics."

Gap's look for guys this spring is sports-inspired, also in more vibrant colors. "We're also debuting a stress-free line of work clothes for men that are treated with a spill-free treatment that prevents stains," she said.

Harry Ikenson, analyst with First Albany Capital, said he'll be closely watching how customers respond to the spring offerings. "Gap's management appears to be focused more on improving profits. Wall Street will certainly become concerned if earnings miss expectations."  

-- analysts quoted in the story do not personally own shares of Gap Inc. In some instances, their firms do maintain an investment banking relationship with the company.