Allders shares tumbled 26p to 178p when it said profits for the year would probably be lower than the pounds 25.4m achieved last year.
The announcement will be a heavy blow to investors in the company which proved a popular flotation when it came to the stock market two years ago. The issue was two and a half times subscribed, but the shares now stand only 8p above the issue price of 170p.
Allders' statement is the latest in a string of downbeat announcements from UK retailers. This week alone, Laura Ashley, Sears and World of Leather have warned of weaker sales. Next, the fashion chain, is one of only a few which have managed to buck the trend.
Allders chairman John Pattisson said the group's department store division had been dogged by poor levels of consumer demand throughout the summer and may fall into loss in the second half.
He said: "Whilst the last three weeks have seen some considerable improvement, sales for the 24 weeks to 16 September have shown no increase on last year on a like-for-like basis."
In the duty free division, new openings in Paris and Copenhagen also produced trading losses in their start-up phase.
One analyst said: "It's no surprise that summer trading has been weak in department stores. And one-off costs in duty free have just been higher than expected in new outlets. We should see a reasonable profits bounce back next year as the one-off costs fall out."
In June Allders announced pre-tax profits of pounds 16.5m for the six months to March. The structure of the group is supposed to offer balance between the department stores, which do well in the winter, and the duty free outlets, which enjoy their best trading in the summer months when airports are at their most crowded. But in the first half, department store profits dipped.
Allders has been investing heavily in its department stores whilst also testing an Allders at Home, edge-of-town format.
Internationally, the company has been expanding its duty free business, particularly outside Europe, where the European Commission is threatening to end duty free shopping by 1999.Reuse content