Upscale department store group Harvey Nichols on Tuesday announced a 2.9 per cent year-on-year fall in first half same-store sales at its flagship Knightsbridge store.

The company said in a trading update same-store sales at its Leeds store surged 12 per cent in the six month period but sales at its London outlet, which generates around 75 per cent of total sales, continue to disappoint.

Harvey Nichols was hit hard by the UK tourism slump triggered by last year's terrorist attacks in the US and in June posted a 20 per cent slide in annual profits to £12.5 million from £15.6m in 2001.

Last month, the company revealed it has agreed to a £137.5m buyout by its chairman, Hong Kong businessman Dickson Poon, and his family, although its largest institutional shareholder, Deutsche Bank, said recently it thinks that offer is too low.