Teen apparel chain Deb Shops Inc on Thursday posted a sharp plunge in first quarter net profit to $300,000 from $3.3 million in the year-ago period.

The Philadelphia-based operator of 331 stores said in a statement net sales fell nine per cent to $70.2m from $77m last year.

The retailer continues to expect fiscal 2004 sales to be flat versus fiscal 2003 based on a projected mid-single digit same-store sales decrease offset by net new store growth.

President and CEO, Marvin Rounick, stated: "The first quarter saw a confluence of events that contributed to our performance. In combination, the war, the weather, higher gas prices and the economy negatively affected same store sales and therefore contributed to our profit decline.

"Despite the current results, however, we remain focused on store level operations, and in particular, inventory management. After a careful review, we are comfortable with our current inventory levels heading into the remainder of the second quarter.

"That said, the weather and the economy will still remain an important factor in terms of recovery."