Teen clothing retailer Abercrombie & Fitch Co. says it will begin selling larger sizes in the wake of a scandal earlier this year over its CEO’s remarks about offering products only for the young “cool” [read skinny] crowd.

The U.S.-based retailer has seen same-store sales plunge and was in the red by its third quarter ended Nov. 2.

Abercrombie & Fitch reported net loss of $15.6 million US, or 20 cents a share, compared with income of $84 million in the third quarter of 2012.

Comparable store sales have declined for the seventh straight quarter and the retailer may be looking at a grim holiday season as its competitors offer deep discounts.

"We expect promotional levels through the holiday season to maintain the depth and aggressiveness seen in September and October, as retailers look to move goods in order to enter 2014 in a clean inventory position," Janney Capital Markets analyst Adrienne Tennant said in a research note on Wednesday.

High unemployment among the young has cut into teen spending. The 18 to 24 demographic is notoriously fickle and Abercrombie has limited its market by offering no garments over size 10.

Remarks CEO Mike Jeffries made in a Salon interview in 2006resurfaced earlier this year, leading to outrage over its no-plus-size policy.

“In every school there are the cool kids and popular kids, and then there are the not-so-cool kids…Candidly, we go after the cool kids,’ he was quoted as saying.

A Change.org petition complaining about the policy was launched and the company’s stock price plunged amid the bad publicity.

In a meeting in early November, the company agreed to add plus-sizes to its lineup in 2014, as well as offering a wider range of colours and adding shoes to its mix.

The retailer is planning to close its Gilly Hicks lingerie and sleepwear operation and faces restructuring charges over the change.

Its main retail operations also are in trouble. Comparable sales fell 13 per cent at Abercrombie & Fitch outlets, four per cent at Ambercrombie Kids and 16 per cent at the company's Hollister chain of teen clothing stores.

Its stock is currently trading at $35.01, down from a 52-week high of $55.23.