Department store group Allders on Wednesday posted a 52 per cent plunge in first half pre-tax profits to £10.5 million but claimed the slide was due to actions taken to improve long-term profits.

The company said in a statement total sales rose 3.5 per cent to £308.5m, with like-for-like sales down 0.4 per cent. It added gross margins rose by 1.4 per cent to 37.8 per cent, which chief executive Harvey Lipsith said was proof the group's strategy is working.

"Although the sales environment has been challenging in the first six months, much of this has been the result of deliberate actions taken on our part to improve margins, reposition the Allders brand and increase efficiencies across the business," he said.

"The continued improvement in our gross margin demonstrates that our strategy is firmly on track, notwithstanding the impact that these actions are inevitably having on our short-term performance."

New store openings cut operating profit to £13.2m from £14.1m. The firm believes it can save £9m a year after its recent major internal re-organisation to improve efficiency.