IRVINE, Calif. -- House2Home Inc. has warned that sales for the third fiscal quarter ending Oct. 27 have been running approximately 25% to 30% below the rate logged prior to the Sept. 11 terrorist attacks.

This is expected to lead to substantially lower sales and a greater net loss for the quarter and full year than was previously anticipated, the company said. House2Home expects to announce third quarter results in mid-November.

“We continue to believe in the House2Home concept but acknowledge that the unforeseen events of Sept. 11 have exacerbated an already strained economic environment,” said Herb Zarkin, chairman and CEO. “The continuing impact of these tragic events has raised the level of uncertainty surrounding ongoing sales levels, putting increased pressure on the company’s liquidity and our bottom line. We remain focused on developing programs to strengthen sales and attract customers to our stores as well as considering any and all strategic measures with respect to the future of our business.”

To this end, the company also announced it has retained the services of Barrington Associates, an investment banking firm, to assist in exploring various strategic and financial alternatives. The company noted that it remains in compliance with its bank covenants, although the margins of compliance under its financial performance covenants are decreasing as the sales downturn continues.

House2Home operates 42 home decorating superstores in three western states. Averaging more than 100,000 square feet, House2Home stores offer a selection of specialty home decor merchandise across the product categories of outdoor living, indoor living, home decor and accessories, and seasonal goods.