Ethical cosmetics chain Body Shop has extended a run of poor results by announcing sliding profits for the first half of the year.

The 1980s High Street icon made �2.5m ($3.9m) before tax and one-off costs in the 26 weeks to August, slipping from �3m last year as it dealt with increasing mainstream competition on both sides of the Atlantic.

Including the extra costs, the company in fact made a loss of �700,000.

But it said that sales in the first five weeks of the second half were up 3% on last year, and looked forward to a good holiday season.

"Our outcome for the full year is, as always, dependent on trading during the Christmas period," said chief executive Peter Saunders.

"But we continue to believe that there will be an improvement in performance over last year."

Apart from anything else, he noted that 2001 sales had been distorted by the after-effects of the 11 September tragedy.

City reaction

After its rip-roaring success in the 1980s, as it championed peppermint foot lotion and tea tree shampoo, Body Shop has fallen on harder times.

Last year produced profits before tax down 9% to �11.6m, while failed buy-out talks brought the departure of its high-profile founder, Anita Roddick.

The Body Shop owns about 500 stores in 50 countries, and also runs a network of international franchised outlets.

The results failed to move the market, however, with Body Shop shares closing unchanged at 103.5 pence.