Sweden's RNB Retail and Brands has posted a fall in its interim profit, noting a weaker-than-expected sales trend for its J-Store and JC store concepts.

The J-Store and JC store concepts saw sales decline about 10% compared with the corresponding period in the preceding fiscal year, with autumn 2007 collections not satisfying customer expectations, the company said.

"Since the spring collection is also regarded as weak, an extra impairment of inventories attributable to spring products, in an amount of SEK55m (US$9.19m), was charged against the second quarter. Work on designing new concepts and concept expressions for JC and J-Store is under way and is expected to be completed in time for the autumn 2008 collections," a statement said.

This charge, together with positive nonrecurring items of SEK84.4m, meant that RNB reported a first-half profit after tax of SEK6.5m, down from a profit of SEK176.3m in a prior year period.

RNB's net sales during the interim period amounted to SEK1,777.8m, from SEK1,770.8m in first-half 2006, with sales in comparable stores during the period declining 0.3%.

Last month its Polarn O Pyret children's wear brand signed a franchise deal in the US with SPM Retail LLC, and its first store is expected to be opened in the spring of 2009.

Polarn O Pyret net sales during the period were roughly slightly down, to SEK208.2m from SEK210.7m last year, with sales in comparable stores down 4.4%. It opened an additional three stores in the period, with 43 franchises opening.

The company said that sales in the ready-to-wear and fashion clothing industry in Sweden as a whole grew by 1.1% during the period September 2007 - February 2008, according to the HUI index , and also showed that sales during the second quarter of the fiscal year declined 0.5%.

Net sales of RNB's Department Stores business area was up to SEK614.1m from SEK490.0m in H1 2006, the company said.

In its outlook the company said that earnings for the first half of the year were adversely affected by impairment losses and a weak sales trend for JC and J-Store, with the ongoing repositioning to be finalised in time for the 2008 autumn collection.