Off-price retailer Factory 2-U Stores Inc on Wednesday reported a net loss of $3.5 million or $0.27 per share in the third quarter, compared to a net loss of $0.3 million or $0.03 per share for the same period last year.

For the third quarter ended 2 November 2002 net sales decreased 7.6 per cent to $134.5 million from $145.6 million for the same period last year. Comparable store sales dropped 5.6 per cent.

For the nine-month period, net sales decreased 7.6 per cent to $379.5 million from $410.6 million for the same period last year. Same store sales fell 8.5 per cent.

The company incurred a pre-tax charge of $2.1 million to settle a lawsuit alleging it violated the California Labor Code and Internal Wage Commission Orders.