• Q1 net loss widened to $2.3m from $1.2m
  • Net sales almost flat at $28.4m
  • Comparable store sales increased 5.5% 

Intimate apparel and swimwear retailer Frederick's of Hollywood Group Inc has seen its first quarter losses almost double after promotions aimed at driving sales also ate into gross margin.

Efforts to drive revenues helped lift same-store sales by 5.5% in the three months to 29 October. But chairman and CEO Thomas Lynch said promotional activities were still necessary to increase customer traffic and remain competitive.

"This included promotional shipping offers for online customers to stimulate sales, which led to a decrease in other revenue and negatively impacted our gross margin," he added.

"We also experienced a $627,000 reduction in margin assistance from our vendors in the first quarter of fiscal 2012 compared to the same period in the prior year.

"As expected, these activities resulted in a higher cost of sales for the quarter compared to the first quarter of fiscal 2011."