Specialty retailer Christopher & Banks struggled in the second quarter as traffic slowed in August and shoppers found little inspiration in the offerings.

The Plymouth-based chain of nearly 800 stores eked out a 1 percent increase in same-store sales, a key measure of a retailer's health because it compares stores open at least a year.

For the quarter ended Aug. 28, the retailer posted a loss of $2.5 million, or 7 cents a share, falling short of analysts expectations, and widening last year's loss by 20 percent. Excluding one-time expenses, the loss was 6 cents a share.

Total sales for the period were up slightly from last year, to $101.3 million.

CEO Lorna Nagler said customers are being more selective and are focusing on "new" and "versatile," with vests and shirt jackets selling better than jackets.

Customers "voted No" on merchandise in late summer, prompting markdowns that cut into profits, she said. September sales are on the rebound, the company said, as more color and patterns were added to the mix.

The company operates 530 Christopher & Banks stores, 257 plus-sized C.J. Banks and two "dual concept" stores that combine both labels.

Last week, the retailer opened two outlet stores in a test it says was driven by "opportunistic real estate" and a desire to grow into a new area.

The company has closed nearly two dozen underperforming stores since last year, but plans to open three dual concept stores by year's end.

Executives offered a more upbeat view of the quarter ahead: same-store sales higher by the low single digits.

They warned of lower gross margins as cotton and labor costs rise and retailers offer holiday discounts.

Jackie Crosby • 612-673-7335