Fashion chain Boutiques San Francisco on Wednesday revealed it swung to a third quarter loss due to soft sales at its flagship Les Ailes de la Mode store in Montreal.

The company reported a loss of C$839,000, or eight Canadian cents a share, for the 13 week period compared with a profit of C$213,000, or two Canadian cents a share, in 2001.

The operator of more than 180 stores under eight banners such as West Coast and Bikini Village said quarterly sales rose 14 per cent to C$72 million from C$63.2m.

"Our team has several challenges to meet as major developments are under way in Les Ailes de la Mode banner and two of these stores are necessarily going through their running-in period, said Jacques Fournier, vice-president  finance.

"In addition, the retailing slowdown in our segments and intensified competition mean we have to constantly revise our ways of doing business. We are confident we can successfully meet these challenges and achieve a steady improvement in
financial results within the next fiscal year beginning February 1st, 2003.

"We are therefore studying measures to lower our operating costs in the
coming months, while optimising our most profitable assets."

The company added president and COO Guy Charron had quit and will be replaced by chairman and CEO Paul Delage Roberge.