NEW YORK — Heavy promotions at retail pressured Hampshire Group Ltd. to a deeper second-quarter loss despite sales that were on plan.

For the three months ended June 28, the Anderson, S.C.-based manufacturer of moderate sportswear for women and men reported a net loss of $952,000, or 20 cents a diluted share. That compares with last year’s loss of $523,000, or 11 cents.

Sales notched up 1.3 percent to $32 million from $31.5 million in the prior-year quarter, but gross margin was eroded by customer allowances due to the difficult and highly promotional retail environment, Hampshire said.

“Everything in stores is on sale right now and the customers want more sales,” said chief executive officer Ludwig Kuttner. “We gained some market share, which is good, and our unit shipments were up, so that’s positive. We think the most important thing is that we are servicing the accounts and our products are selling well in a terrible environment.”

Although Hampshire’s stock dipped 82 cents, or 2.6 percent, to close at $30.63 in Nasdaq trading on Friday, it has been trading close to its 52-week high of $31.50 for the last four months. Indeed, Hampshire shares have more than doubled their 52-week low of $15.25, reached Sept. 19.

Kuttner added the ongoing confluence of negative events affecting retail is in many ways unprecedented.

“Part of it is that as far as general market conditions go, we were hit with the weak economy, the war, SARS, seemingly everything,” Kuttner said. “We’ve been in business with some people for 40 years and they say they have never seen anything like this. It’s difficult to make money under those circumstances.”

Still, Kuttner remains sanguine about Hampshire’s ability to weather the storm until retail picks up again.

“We are in a strong cash position and we run a tight ship without costs and overhead being an albatross around our necks,” said Kuttner.

For the first half of the fiscal year, Hampshire said net income fell 73.8 percent to $150,000, or 3 cents, from $573,000, or 12 cents, a year ago.Sales rose 11.7 percent to $83.1 million from $74.4 million last year.

Looking ahead, Kuttner said in a statement, “We are entering what has consistently been the strongest part of our year with a healthy open order position. We continue to stay focused on long-term goals and on maintaining our excellent relationships with our retail partners.”

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