By  on March 15, 2011

Frederick’s of Hollywood Group Inc. is taking its provocativeinnerwear message to the Middle East as it seeks to make up revenueslost from the sale of its wholesale division.

The New York-basedlingerie chain said Tuesday that it inked a multiyear deal with the AbuDhabi-based Emirates Associated Business Group to open at least 10retail stores in six Middle Eastern countries. Frederick’s of Hollywood,which currently operates 126 retail stores exclusively in NorthAmerica, expects to open an Abu Dhabi flagship next month.

“Byutilizing licensing agreements to enter new geographic markets, we cancost-effectively and quickly grow our business, while also benefitingfrom our partners’ knowledge, presence and experience in these newretail environments,” said chairman and chief executive officer ThomasLynch, who earlier in the week underscored the need for the brand toincrease revenues after sluggish quarterly results, due partially to thesale in October of its wholesale division, formerly known as MovieStar, to Dolce Vita Intimates LLC.

In the second quarter endedJan. 29, Frederick’s recorded a net loss of $3.3 million, or 8 cents adiluted share, compared with a loss of $4.9 million, or 18 cents ashare, in the year-ago quarter.

Adjusted earnings beforeinterest, taxes, depreciation and amortization from continuingoperations was a loss of $1.3 million versus a loss of $400,000.

Netsales slid 11.3 percent to $32.6 million from $36.7 million a yearearlier. Quarterly same-store sales fell 16.5 percent, and gross marginslid to 35 percent of sales versus year-ago margin of 36.7 percent.

“Althoughwe are disappointed with our lower retail store sales, we continue tomake significant progress in improving our overall retail business,”Lynch said. “We primarily attribute these lower sales to late deliveriesof merchandise, which resulted from credit limits imposed by certain ofour vendors prior to the sale of our wholesale division.”

Theceo added that the lateness of deliveries, coupled with conservativeexpectations for holiday, resulted in “lower than optimal inventorylevels,” but the firm’s “improved financial condition” following thesale of its wholesale division had led to an elevation of its vendors’credit limits, which “will result in timely product deliveries goingforward.”

For the six months, the company’s net loss shrank to$4.5 million, or 12 cents a diluted share, compared with a loss of $9.3million, or 35 cents, a year earlier. Sales declined 9.8 percent to$61.2 million from $67.9 million.

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