US baker Tasty Baking Co. swung to a loss in the second quarter of the year thanks to costs linked to its new production facility but also a 7% fall in sales.

The company today (2 August) posted a net loss of US$3.3m for the three months to the end of June, compared to net income of $2.3m a year ago.

Tasty Baking said it had incurred $5.1m of costs due to maintaining two production facilities while the business moved to its new Navy Yard site.

The Navy Yard site first started production last November but Tasty Baking has been moving from its Hunting Park facility in phases. The Hunting Park site closed in June.

However, the company saw promotions and higher "product return" costs hit sales. Total net sales fell 7.3% in the second quarter to $43.5m.

President and CEO Charles Pizzi insisted Tasty Baking said the business had been "outperforming" its rivals although he acknowledged the last three months had been "challenging".

"The second quarter of 2010 proved to be a challenging period for us in terms of top-line performance as well as the transition to the Navy Yard facility," Pizzi said.

"While we continued to outperform the category and increased our overall share, sales were down significantly versus the second quarter of 2009."

Pizzi added: "We are intently focused on combating these top-line pressures through a combination of new products, new packaging and increased penetration in selected Route expansion territories."

Tasty Baking's net loss over the first six months of 2010 stood at $7.3m. First-half net sales were down 6.9% at $86.7m.