They fell to £1.9m from £6.7m at the same time last year.

The company was hit by the costs of de-merging from the Sears group and the recent floatation on the stock exchange.

Sales at its flagship Oxford street store were also lower - affected by the refurbishment of the shop and the poor weather.

Changes starting to reap results

Earlier this month Selfridges opened its first store at the new Trafford Centre in Manchester.

The company said sales in the first few weeks of business at the new 160,000 square foot store were encouraging and well up to expectations.

The shop on Oxford Street - television's latest star

It expected the Manchester branch to make a contribution to profits by the end of 1999.

Chairman Alun Cathcart said: "This has been a year of unprecedented change and progress within Selfridges, with many of the changes already beginning to produce results."

The profile of Selfridges has certainly been raised after it featured in the latest fly-on-the-wall documentary series, The Shop.

Comeback or downturn?

Chief executive Vittorio Radice added: "The departments are coming back refurbished with new products and new brands are performing well - that gives us confidence."

Shareholders will get a maiden interim dividend of 1.6p.

However, retail analysts remained cautious about the outlook for high street retailers, saying conditions would be tough in the second half of the year.

One said: "There has been quite a bit of softening on the high street and although the Selfridges store in London is unique, they may feel it (the tough conditions) in their Manchester store."

Selfridges is not the only store that is suffering.

The department store group, House of Fraser, announced a pre-tax loss of £1.8m in the six months to August on Wednesday.