Allders' problems come after a string of poor results from retailers.

Will the tills ring?

The results appear to provide further evidence that tills will not be ringing over the festive period as shoppers react to a slowdown in the UK economy by keeping a tight hold on their wallets.

Against this trend, however, a survey of consumer intentions by credit card provider Goldfish suggests people plan to spend 30% more this Christmas.

Allders announced a 16% drop in profits to £19.4m in the year to September.

It also said that sales have fallen in the first weeks of its current financial year.

Confidence at a 'low ebb'

Comparable sales have slumped 3.7% in the last few months.

Chief Executive Harvey Lipsith said: "The first eight weeks of the current financial year have clearly shown that consumer confidence is still at a low ebb".

The company, which warned of a fall in profits back in August, predicted that consumer confidence would not be easily rebuilt despite reductions in UK interest rates.

Uncertain future

The firm says that the year ahead is likely to be testing, and that at the moment it is difficult to predict the outcome of Christmas trading and the winter sales.

However Mr Lipsith said: "We're reasonably confident about the (January) sale, because when times are tough you usually see a disproportionately successful sale."

Allders is sticking to its expansion programme, which includes two new UK stores this year at Chester and Chichester, despite the poor results.

Allders is also on the look out for acquisitions.