Lace maker and lingerie supplier Sherwood Group Plc has recorded a pre-tax loss of £3.4 million for full-year 2003, compared with a profit of £2m in the previous year.

The company also posted a fall in operating profits to £1.3m for the year, down from £2.8m in 2002.

According to chairman Noel Jervis, 2003 had been "a challenging year" for the company.

"The core garment business has earned a lower profit at margins which are under pressure in an ever-increasingly competitive market place," he said.

Despite the downturn, Sherwood has reported a 15 per cent year-on-year increase in deliveries for the first 12 weeks of 2004, with all areas of business except contract nightwear exhibiting growth.