MILAN — Citing poor market conditions in North America and Europe as well as high investment costs for its network of stores, Jil Sander recorded a net loss for the first half of the year.

The German design house posted a first-half loss of $13.4 million, compared with a slight profit of $73,679 in the year-earlier period. The first-half loss eclipsed the $10.5 million full-year loss in 2001. Dollar figures have been converted from the euro at current exchange rates.

For the six months ended June 30, sales rose 1.7 percent to $66.8 million.

"Revenues reflect the unfavorable situation of European and North American markets," the company said in a statement. "These do not yet permit margins that may be sufficient to recover the additional costs arising from the high investments in [Jil Sander-]owned shops."

Bernhard Wirmer, Jil Sander’s financial director, said total investments in stores, both for new sales points and from repurchasing franchised shops came to $47.8 million from January 2001 through June 2002.

Since Prada bought control of Jil Sander in 1999, the number of Jil Sander stores has grown from seven to 19, including a new flagship in London and new sales points in Taipei, Taiwan, and Düsseldorf. On Friday, Jil Sander will cut the ribbon on its new flagship in New York.

Wirmer added that Jil Sander may choose to close one or two sales points in the future as it streamlines its retail structure.

Chiara Tirloni, an analyst with UBS Warburg in Milan, said said first-half sales held up fairly well considering that even larger brands like Gucci saw a drop in first-quarter revenue.

"In terms of revenue, it didn’t go that badly," she said. "Sales did not suffer that much."

On a positive note, Jil Sander predicted market conditions would improve and forecast that losses in the second half of the year would be lower than in the first six months.

Wirmer said wholesale orders for the women’s pre-collection spring-summer 2003, which includes the new cruise collection, are just under 10 percent higher than orders a year earlier. He also noted strength in Japan, where retail sales for the first eight months of the year are up 39 percent on the year."It seems that we are extremely trendy in Japan right now," Wirmer said.

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