Upscale clothing retailer Austin Reed Group Plc on Thursday posted a sharp slide in first half profit as sales were impacted by a revamp of its flagship London store, the war in Iraq and the SARS crisis.

The operator of around 90 stores and concessions across the UK reported a pre-tax profit for the six months to August 9 of £1.1 million versus £2.7m in the same period of last year.

Including exceptionals, its pre-tax profit was £3.5m compared to £2.7m last year while group turnover fell 6.5 per cent year-on-year to £56.1m as it was hurt by the redevelopment of its key Regent Street store.

Retail sales dropped seven per cent year-on-year while licensing revenues surged 35 per cent to £1.4m from 2002.

The company added sales in the first eight weeks of the second half were down six per cent on a same-store basis while total sales were flat.

"The first half has been a period of substantial transition as we build the foundations for future growth," it said in a statement today.

"Some of the benefits from this will be seen in the second half of this year although the full impact will be made next year as we gain a full year's trading from the new Regent Street store; cost savings of £1.5m; relaunch of the Country Casuals Main range and Petite collections, and the redesign and restructuring of the Austin Reed ranges."