Net sales for fiscal 2006 increased 3.9% to $1.88 billion from$1.81 billion in fiscal 2005. Fiscal year 2006 same-store net salesdecreased 0.8% versus a same-store sales increase of 3.2% in theprior year.Rosskamm said that fiscal 2005 was a record year for thechain and encouraged the management team to make decisions thatnegatively impacted the business.

"We were overly optimistic," he admitted. Moreover, during thefourth quarter, the chain saw negative trends of declining trafficand softening customer demand gain momentum, Rosskamm said.Specifically, the industry experienced its worst slowdown in sewingsince the 1990s, he noted.

During the fourth quarter, net loss was $18 million, or 78 centsper diluted share, compared with net income of $32.3 million, or$1.40 per diluted share in the prior year. Although net sales forthe fourth quarter increased 2.7% to $604.1 million from $588.2million a year ago, same-store net sales decreased 3% for thequarter, versus a same-store sales increase of 4.3% in the fourthquarter last year.