Like-for-like sales at department store group Beales dropped 6.4% for the 26 weeks to May 3.
Beales said that substantial cost cuts were achieved during the period which helped pre-tax profits rise slightly to £881,000 against £875,000 the same period the previous year.
However, Beales said that long term success depended on reversing the decline in sales but added in a statement it did not expect a significant improvement in the current financial year.
Beales saw gross sales - which includes concessions - drop by 14.5%, partly due to the closure of the department store group's shop in Ealing, West London last October. Revenue was £27 million for the 26 week period.
Tony Brown, previously retail director at Bhs, joined Beales as chief executive at the beginning of June. He is in the process of developing a new strategy for the department store group.
Beales chairman Mike Killingley said: "The deterioration of the UK economy since this time last year has dramatically affected consumer confidence and it seems likely that the economy will remain depressed for some time."
"We have limited the impact of these difficulties by reducing our cost base substantially and we are continuing to examine costs critically to enable further savings to be made. A return to profitability, however, depends on reversing the decline in sales."
Killingley added: "Our senior management team, under Tony Brown, is developing its strategy to deliver such improvements and we will report on this strategy and its implementation more fully at the time of the full year results. We do not anticipate any significant improvement in our sales performance during the remainder of the current financial year."