Upscale sportswear and outerwear designer and marketer Cutter & Buck on Wednesday posted flat second quarter net income and said it will close it loss-making retail stores to focus on its core business.

The Seattle-based company, which in August discovered accounting irregularities in some of its financial statements, posted a net profit of $300,000 after extraordinary items with net sales down 12 per cent to $39.4 million from $44.8m.

It will begin special sales events this week at its 13 stores in order to liquidate inventory and said special charges this year for the closures are expected to be between $12m and $15m before taxes, although the final figures could vary.

It did not say how many jobs are likely to be lost as a result of the stores' closure.

CEO Fran Conley said: "We are making good progress in the turnaround of the company, and our most recent quarter showed a small profit. Our balance sheet is strong and liquid. However, the retail stores are a drag on performance. If we keep them, the drag will continue.

"Recognising that our core business provides most of our sales and all of our profits, the board of directors determined that Cutter & Buck should focus its resources on that business."

"We are pleased to have generated a profit in spite of the expense and distraction caused by the need to restate our financial results. We are aiming first at restoring profitability and believe we will reap the rewards of our steps to restructure and streamline our business."