Fabric producer Dan River Inc on Wednesday announced a 30 per cent plunge in third quarter sales from 2002 as it failed to meet its credit facility's financial covenant for the quarter.

The Virginia-based company said net sales fell to $103.7 million from $147.4m last year with sales of apparel fabrics down by a third to $20.5m from $10.7m last year.

"Coming into the third quarter, the company expected sales to improve during the second half of fiscal 2003; however, the company experienced a sales decline during the third quarter," it said in a news release.

"Since the company's sales fell short of expectations in the third quarter of fiscal 2003 and are expected to remain at those levels in the fourth quarter, the company plans to curtail a large portion of its operations for extended periods during the fourth quarter in order to keep inventories in line.

"The cost of these curtailments will negatively impact the fiscal fourth quarter results," it said, adding it will work with its lenders for further amendments or waivers to be compliant with the terms of its credit facility during fiscal 2004.