Net sales also fell, by 0.9%, to $573.3 million, and Linens reported a $5.9 million net loss for the quarter. "We are clearly disappointed that we have not been able to generate a stronger sales performance for the first half of the year," said Jack Moore, the company's president and COO, during a conference call.

The product transition hurt the delivery of new product, decreased guest traffic and impacted other parts of the business. Executives say they expect a turnaround for the second half of the year, though rising fuel costs could put a damper on the improvement.

Last week's hiring of Jane Gilmartin, a former executive at Ross Stores, as chief merchandising officer could shift the retailer in a positive direction, executives said. An increased merchandising assortment, a new market program focusing of direct mailing and publication insertions, improving the availability of core items and other factors could also spur growth.