NEW YORK, Aug 2, 2002/ --- Hugo Boss Wednesday posted an operating loss of 33.3 million euro ($32.6 million) in the second quarter, with sales down two percent to 175.5 million euro ($172 million).

The significant drop, down from a 700,000 euro profit in the same period last year, is yet another blow to the German company, which has already twice downgraded its profit outlook this year.

Last week, Hugo Boss announced that its net profit for the year would be down 33 percent from last year's 107 million euro, to 70 million euro.

In May, it cut its forecast to 95 million euro, citing inventory discrepancies during stocktaking in the United States and a continuing weak U.S. economy.

The company had previously expected profits to remain flat.

In the second quarter, Hugo Boss's sales fell particularly dramatically in Germany and the U.S., each market posting a 10 percent loss, to 52 million euro and 44.8 million euro respectively.

"Our U.S. operations fell well below our targets, as a result of the poor economic conditions, higher provisions for risks and non-recurring effects," said CEO Bruno Salzer in a statement Wednesday.

He continued, "We have installed a new, experienced management team under a new leadership." U.S. boss Marty Staff stepped down in May amidst accounting discrepancies that left a 6 million euro gap in inventory.

He was replaced by Tony Lucia, previously senior vice president of sales for Hugo Boss's U.S. operations.

Boss Woman, which launched in October 2000, has yet to take off, but the company expects it to become profitable by mid-2003. The label saw sales fall 43 percent, to 6.4 million euro, in the second quarter.

The company has described 2002 as a "transitional year" for the women's business.

In February, Hugo Boss said it would move its women's operations from Milan to its home base of Metzingen.

The integration will be completed no later than September, and the company is currently presenting the spring/summer 2003 women's collection, the first to be created entirely in Germany.