The former Movie Star Inc intimate apparel business recorded a loss in the first half of its fiscal year, which completed shortly before its merger with Frederick's of Hollywood was finalised.

But management at the renamed Frederick's of Hollywood Group say they are excited about the prospects for the business in the second half of the year, following the merger on 28 January.

Movie Star recorded second quarter net sales of US$17.7m, up slightly on last year's figure of $17.5m.

However, gross margins fell, leaving net income at $297,000, compared to last year's figure of $578,000. That left first half net sales at $29.7m, down from $36.2m last year.

The company recorded a net loss of $669,000, compared to previous net income of $944,000.

But Mel Knigin, president and CEO of Frederick's Movie Star division, was not downcast by the figures.

"We expect second-half sales for the Movie Star division to compare favourably to last year's second half, as a result of our strong open order position," Knigin said.

"We have worked hard to complete the merger and are excited that we can now focus on successfully growing a company that currently has over $200m in combined annual revenue and offers greater growth opportunities than each company had previously on a stand-alone basis."