New York based women's wear retailer Cache Inc has swung to a third quarter net loss amid store closure costs and falling sales, and says its earnings for the year are likely to come in at the lower end of earlier guidance.

For the 13 weeks to 27 September, net loss was $1.6m or $0.12 per share, including $0.02 per diluted share in store closure costs. This compares with a profit of $161,000 or $0.01 per diluted share in the third quarter of fiscal 2007.

Net sales fell 4.0% to $58.1m from $60.6m last time, and comparable store sales were down 4%.

Lower sales and a new pricing strategy meant that gross profit declined to $25.6m, or 44.1% of net sales, compared to $27.7m, or 45.7% of net sales, a year earlier.

Thomas Reinckens, chairman and chief executive officer, said the results were "negatively affected by the challenging economy, which heightened in severity in September.

"This caused a dramatic reduction in mall traffic, as consumers tightened their spending on discretionary items, which reduced our sales and profitability during the quarter."

The company, which operates 295 Cache and Cache Luxe stores, said it expects the holiday season to be "difficult."

Earnings per share will be at the low end of earlier forecasts, the company said. For the fourth quarter this will be in the range of $0.24 to $0.29, and for the fiscal year will be $0.12 to $0.17.