J. Jill ( JILL) warned of a third-quarter loss, saying heavy promotional activity hurt margins.

The Quincy, Mass., fashion retailer said it would lose about 13 cents a share for the quarter, in line with its year-ago loss. Sales will rise to $103 million from $95 million a year earlier, in line with Wall Street estimates. Same-store sales should rise 4.7% from a year ago.

But the company said a slowdown in its more lucrative direct-selling business would punish profit for the period. Analysts surveyed by Thomson First Call had projected a break-even quarter.

"Importantly, even though we continue to take steps to address these concerns and believe we are making progress, neither of these challenges is likely to be overcome in the short-term," said CEO Gordon Cooke.

On Thursday, J. Jill shares rose 28 cents to $15.24.

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