Off-price retailer Factory 2-U Stores Inc said sales for the 13 weeks ended 4 May 2002 fell 7.1 per cent to $117.0 million, against $125.8 million in the same period last year.

Comparable store sales for the period decreased 11.8 per cent versus a decrease of 6.3 per cent for the same period last year. The company reported a net loss of $3.1 million, or $0.24 per share in the first quarter, compared to a net loss of $1.4 million, or $0.11 per share for the same period last year.

Mike Searles, president and chief executive officer said: "We expect a gradual improvement in sales trends and operating results, with a high expectation for accelerating improvement in the second half of the year. For the second quarter, we expect comparable store sales to be negative mid single-digit, operating results to be breakeven and to open five new stores."

The company currently operates 256 Factory 2-U stores which sell branded casual apparel as well as selected domestics and household merchandise.