Teen apparel retailer Deb Shops reported second-quarter sales and income decreases, which it blamed on "the challenging economic environment".

Quarterly net sales fell 0.4% to US$75.7m from $76m last year. Net income was $5.9m in the quarter compared to $6.6m a year ago.

President Marvin Rounick said: "While we are disappointed with our recent performance, we believe that our operating philosophies are sound and we continue to be optimistic about our longer-term prospects.

"With that said, given the current trends in our business and our relatively strong second half of fiscal 2006, we believe it is prudent to adopt a more conservative outlook for the second half of this fiscal year."

Net sales for the first six months of fiscal 2007 increased 2.4% to $157.1m from $153.5m for the comparable prior-year period. Net income for the period was $8.6m versus $9.4m in the first half of fiscal 2006.

Deb currently expects full-year sales of $320m to $325m compared to a previous forecast of $325 to $330m. It also foresees diluted earnings per share of $1.30 to $1.40 compared to $1.40 to $1.50, as predicted previously.