Europe's biggest department store group, KarstadtQuelle, is forecasting a 25 per cent raise in full year profits, despite poor retail conditions.

The German firm says that a strong performance from its department stores made up for weaker results from its mail order business.

Pre-tax losses in the first half narrowed by 17.3 per cent to Euros 40.9m from Euros 49.5m the previous year.

The store group reported a 4.3 per cent rise in first half sales to Euros 7.5bn last month. And it says that restructuring and growth measures will enable it to further improve results in the second half of the year.

The company is forecasting that 2001 pre-tax profits will rise 25 per cent from Euros 272.8m last year.