NEW YORK — Investors were unimpressed with Tropical Sportswear International Corp.’s reduction in third-quarter losses, sending the stock plummeting more than 40 percent Tuesday.

Including a $1.7 million pretax charge for the extinguishment of debt, the net loss for the three months ended July 3 dropped to $5.8 million, or 52 cents a share, from a shortfall of $30.6 million, or $2.77, in the year-ago period. However, Wall Street apparently was uncomfortable with the firm’s sales, which fell 22.7 percent to $74.8 million from last year’s $96.7 million, and sent shares down $1.51, or 41.9 percent, to close at $2.09 in Tuesday’s Nasdaq session.

Tropical’s earnings statement came out after the close of the market Monday.

On a morning conference call, Michael Kagan, chief executive of the troubled Tampa, Fla.-based bottoms and sportswear resource, called the most recent quarter “another stepping stone toward our turnaround strategy. While we’ve yet to stabilize sales, we have improved third-quarter gross margin and the average selling price per unit.”

The firm also enjoyed positive earnings before interest, taxes, depreciation and amortization for the second consecutive quarter, he pointed out. Kagan declined to provide guidance for upcoming quarters.

For the nine months, the net loss was $12.2 million, or $1.11 a share, versus a loss of $34.9 million, or $3.16, in the 2003 period. Sales fell 20.3 percent to $246 million from $308.5 million.

— Arnold J. Karr

This story first appeared in the July 28, 2004 issue of WWD. Subscribe Today.