Shares in Kathmandu have plunged more than 20 percent after the company said it expected to post a first-half net loss of between $1 million and $2 million.
That compares with last year's first-half profit of $11.4 million.
The latest profit downgrade follows a warning just before Christmas that its first-half profit would be down on the previous year.
The outdoor clothing and equipment company said sales were below expectations and gross profit margins are down after a disappointing Christmas and January.
Sales were up 6.9 percent to just above $179 million in the six months ended late January with sales through stores open 12 months or more, up 2.8 percent on a constant currency basis.
Acting chief executive, Mark Todd, said in a statement his company's sales in Australia through December and January were disappointing.
He said the level of sales at reduced prices to clear excess stocks in the first quarter, particularly in Australia, brought a corresponding reduction in second quarter sales and contributed to the lower margins overall.
Mr Todd said Kathmandu saw lower-than-expected demand for summer and non-technical apparel and the warm weather since Christmas has led to lower sales of cold weather clothing.
He said the company has reviewed its performance and planned campaigns for Easter and winter, when Kathmandu traditionally earns more than 70 percent of annual profit.