A number of factors are keeping consumers from shopping hard

Like-for-like sales - which exclude the effects of new store openings - fell 6.5% in the nine weeks to 2 July.

The company said that conditions remain tough and challenging, while consumer spending had been "subdued".

Matalan, which has already announced job cuts, is not alone in feeling the pinch as higher interest rates and petrol prices have hit spending.

Bank action

The Bank of England is set to announce its latest interest rate decision at midday (1100GMT) on Thursday and there have been increasing calls from retailers and business groups for an interest rate cut.

Matalan chief executive John King became the latest executive to try and prod the Bank into action.

"A reduction in rates and stability in people's mortgage payments would give them a bit of confidence," Mr King said.

Lancashire-based Matalan has refused to say how many jobs will be cut but said it expects the majority of its �15m of annual savings to come from redundancies. Many of the job cuts will be at management level.

The company has 190 UK stores, employs about 17,000 and has its head office at Skelmersdale, northern England.

It made a pre-tax profit of �83.5m last year.

Despite the slowdown in sales, margins have improved, Matalan said. The gross margin was up 1.5% from a year earlier.