While the company said no assurances could be made on if or when a sale would take place, it has retained Credit Suisse First Boston LLC as its financial advisor to assist in the process. Company execs do not expect to update the company's progress or disclose developments of a possible sale unless the board of directors has approved a definitive transaction.

The company also adjusted its second half 2005 expected earnings, stating that based on sales trends to date in the third quarter, Linens now anticipates net earnings to breakeven for the third quarter ending October 1, and comparable same-store sales are estimated to decline by approximately 10%. Although the company had not provided earnings guidance for the third quarter, the consensus estimate of diluted earnings per share for the third quarter is 29 cents.

"While our business has not performed well during this quarter, our balance sheet remains strong, leaving us well positioned as we head into the balance of this year," commented William Giles, executive vice president and chief financial officer.