Reed's Inc has posted rising losses as sales slipped in the second quarter.

The US-based soft drinks company, which owns the Virgil's Root Beer brand, said late last week that net losses for the three months to the end of June climbed to US$873,000 compared to $491,000 for the corresponding quarter a year earlier. Sales dipped, meanwhile, by 8% to $4.2m thanks to a "non-repeat specialty programme" in 2008.

Operating losses also increased, to $759,000 versus $441,000.

For the first six months of this year, net losses improved, coming in at $1.4m against $2.5m in the first half of 2008. Sales were down, however, to $7.6m compared to $8.1m. Operating losses shrank to $1.2m, an improvement on the $2.4m losses a year ago.

"The results for Q2 reflect a continued reduction in our costs of goods sold, along with a decrease in our operating costs, as compared to the prior-year period," said company founder, chairman and CEO, Chris Reed. "Price discounting eroded our gross margins a bit this quarter, but our year-to-date gross margins are ahead of the prior year period.

"We feel that Reed's has reached a critical size where larger players look for strategic relationships, and we are receiving a pretty healthy turnout of national and international players looking at us," Reed continued. "It's too soon to tell what this will produce, but we are encouraged by the early feedback."

Earlier this year, Reed's entered into a sale-leaseback transaction on two buildings in Los Angeles in a bid to cut debt.