NEW YORK — Lower garment-production efficiencies combined with greater-than-expected air-freight costs forced Novel Denim Holdings Inc. to report preliminary first-quarter results that were well below plan.

For the three months ended June 30, the Hong Kong-based denim and chino maker said it now expects to post a diluted loss per share of 67 to 70 cents. That compares to Novel’s previous guidance of a 22-cent loss, including the costs associated with the closing of its Madagascar operations.

In last year’s first quarter the company reported earnings per share of 40 cents.

Sales for this year’s first quarter are expected to be approximately $41 million, or 10 percent better than the $37.2 million in sales reported for the prior-year period.

"While we underestimated the margin impact of the production disruption, we feel comfortable with our expected results in the later half of the year and next fiscal year given certain management and production changes, expanding customer base and strong order book," said chief executive officer K.C. Chao in a statement.

In the previous quarter, which was the fourth quarter of fiscal 2002, Novel took a charge of $5.2 million from costs associated with the disruption to production and the closure of plants in Madagascar. Political and social unrest on that island also led to labor unrest earlier this year that upped the cost of air freight.

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