Christopher & Banks sees lower Q3 margin

Women's apparel retailer Christopher & Banks Corp sees third-quarter margins shrinking as it relies on higher promotions to drive sales, and suspended its quarterly dividend citing its lackluster performance in a tough retail environment.

The company sees a third-quarter gross margin of 21.3 percent to 21.7 percent, compared to 35.9 percent, a year ago.

The specialty retailer expects net sales for the quarter to be $123.9 million, compared with $120.9 million, a year ago.

The company, which operates the Christopher & Banks and CJ Banks chains, said comparable store sales were "essentially flat" for the quarter.

"We were more aggressive in our promotions in order to drive sales and move through seasonal inventory, which resulted in flat comparable store sales, although at sharply lower gross margins," Chief Executive Larry Barenbaum said in a statement.

Shares of the Plymouth, Minnesota-based company closed at $2.48 on Tuesday on the New York Stock Exchange. (Reporting by Meenakshi Iyer in Bangalore; Editing by Esha Dey)