Clothing retailer Ryohin Keikaku Co is to close several stores and slash prices at all its others as it prepares to post an expected consolidated interim net loss of 3.9bn yen ($33.3m).

The huge loss marks a sharp reversal of fortune for the 12-year-old group from the previous term's 3.5bn yen net profit and the initially projected 1.4bn yen net profit.

Directors say the net loss is due to extraordinary losses of 6.36bn yen, of which 3.83bn yen were due to losses on clothing inventory, while another 1.74bn yen was blamed on expenses relating to the restructuring of subsidiaries in the UK and France.

Company chiefs announced they aim to tackle this by reducing the varieties of clothing the reatailer sells by 40 per cent and cutting prices to attract more customers.

Sales of the company's clothing were also hurt by the popularity of other competing lines and  president Tadamitsu Matsui said: "Items that are not popular simply do not sell, even if we cut prices. Therefore we decided to take losses on these items this term."

The value of the firm's clothing inventory - approximately 8bn yen - was roughly halved with this extraordinary loss write-off.

Ryohin Keikaku plans to improve earnings this fiscal half by reducing the firms with which it has clothing transactions by one-third to just 10 in order to cut costs.

For all of fiscal 2001, consolidated sales are expected to rise 3 per cent to 118.7bn yen on contributions from new stores. But operating profit is predicted to fall 41 per cent to 6.9bn yen, with a net loss of 500m yen, in contrast to the previous year's 5.7bn yen net profit.

Earnings at existing stores are expected to drop about 13 per cent, and Ryohin Keikaku is planning to close five money-losing stores as well as shrink another eight.