Women's footwear and apparel firm Candie's Inc on Monday revealed it swung to a second quarter net loss as it was hit by its transition out of footwear operations to its new licensing business.

The company, which is based in New York state, licensed its Bongo footwear to Kenneth Cole Productions Inc and its Candie's footwear to Steven Madden Ltd, in May 2003.

It reported a net loss $3.8 million, or 15 cents a share, for the quarter ended July 31, compared with net income of $3.3m, or 12 cents a share, last year.

Candie's added excluding $2.5m of special charges related to the axing of the footwear operations and to interest expense, the loss for the latest 13 week period was $487,000, or two cents a share.

Second quarter revenues fell 15.1 per cent to $42.1m from $49.6m last year with revenue from its footwear segment falling to $16.6m from $28.4m in the year-ago period.

But licensing income climbed to $1.8m from $1.3m and revenue from Unzipped Apparel LLC, which it acquired in May 2002, rose to $23.6m from $19.8m last year.

President and CEO, Neil Cole, said: "The transition to our new licensing model is on plan and will be completed by the end of the year. We have two powerful lifestyle brands both of which are continuing to gain recognition in the marketplace.

"We are confident that our strategic decision to transition to the new licensing structure will result in increased profitability and shareholder value in the future."

He added the firm will continue to operate its Bongo jeans wear division and Bright Star Footwear, Inc, also a wholly-owned subsidiary, which sells casual men's boots on a direct basis.