Private-label clothing group Tarrant Apparel has warned its full-year profit and sales will miss predictions after suffering a slump in denim demand.

Tarrant also blamed the fact that discount chain Kmart has axed its Gear 7 brand for its reduced profit forecast of $1 million-$2m from a previous prediction of $9m-$12m.

Tarrant, which reported a $104m net loss for 2004, is seeking another distribution channel or retail deal for the Gear 7 brand.

The company slashed its net sales forecast to $210m-$215m from its previous expectation of $240m-$250m.

Tarrant president and chief executive officer Barry Aved said: "While we will fall short of our expectations for 2005 due to certain unanticipated events in the second half of the year, we are extremely pleased with our significant year-over-year improvements.

"As was widely expected, there were many more new premium denim lines competing for market share. However, it wasn't anticipated that denim demand would soften significantly in a period when most retailers planned higher sales."

Tarrant Apparel Group serves specialty retailers, mass merchants, national department stores, and branded wholesalers by designing, merchandising, contracting for the manufacture of, and selling for men, women and children.

Through its subsidiary, Private Brands, Tarrant designs, markets, and distributes privately owned brands.