Profits for the half-year to September 30 were down to £190m compared with £244m in the previous period, excluding exceptional items.

It has been harder than expected to integrate Argos

Turnover at the UK's second biggest retail group was up substantially, from £1.5bn to £2.5bn, reflecting the acquistion of the high street shopping chain Argos and the US information company Metromail.

Chairman Lord Wolfson said: "In common with other retailers in the UK, we have been affected by the recent fall in consumer spending and demand has weakened."

Home shopping weak

Demand was flat in the firm's home shopping division, where a marked slowdown has been seen since September.

Like-for-like sales at Argos were down 3.2% in September and 4% in October and November.

Lord Wolfson said that the group was progressing well with its plans to integrate the Argos business.

They are to merge the customer databases of the two companies and integrate the distribution system.

Troubles in Asia

The group's luxury goods business Burberry has been hard hit by the Asian recession.

With 75% of sales in the Far East, profits at Burberry tumbled to £2m from £19.9m last time, with sales down to £90m from £127m.

But the information division, Experian, had a good year, with profits up to £80m from £66.5m last time.

Profits at the finance division were unchanged, but the company has abandoned attempts to sell off its vehicle finance division.

GUS increased its interim dividend to 6.2p from 6p