QS racked up a pre-tax loss of £24.7 million for the year to March 29.
Pre-tax loss at the value chain, which is being rebranded to Store 21, fell by 10% from £27.5m the previous year, while sales dropped 4.7% to £94.7m.
Auditor Baker Tilly said QS breached one of its bank covenants at the end of last year but had since negotiated new terms with lenders.
QS was bought out by Indian supplier Alok last year. Company chairman Rangaswamy Narayan said in a statement to Drapers that the losses could be absorbed by Alok and the business had already shown improved trading since the year end.
He said: “The company was in transition during the financial year ending March 2008. The business was restructured and strategy reworked to set a positive course and we are confident that in 2008/09 the losses will be substantially reduced.
"Operations are showing a positive trend and the revised strategy is expected to pay off handsomely during the course of this year.”