US retailer Chico's is taking a more conservative approach to 2008 growth plans after third quarter income nearly halved on the back of lower than expected sales.

The company's net sales for the three months to 3 November increased 3.4% to US$416m, but comparable store sales fell 9.3% and income from continuing operations plummeted 44% to $24m.

For the first three quarters of the fiscal year, net sales were up 9.1% to $1.31bn, while comparable store sales fell 5.5% and income from continuing operations fell 25% to $112m.

Chico's front-line stores' margins fell by about 100 basis points in the quarter, due to a higher rate of markdowns, in turn caused by lower than expected sales in front-line divisions.

Scott Edmonds, chairman, president and CEO of Chico's, said the company was "greatly disappointed" by the results.

"Numerous challenges continue to affect the entire retail sector," he said. "It now appears that, based on our November sales performance, our fourth quarter earnings could approach the break-even level."

Edmonds added that the company was moving "aggressively" to control expenditure moving into 2008. "To that end, we are taking a more conservative approach to our fiscal 2008 growth and expansion plans than previously announced by reducing our square footage growth rate from 12-15% to approximately 10%, which will reduce the number of stores we plan to open to approximately 60-65 net new stores."