Woolworths is the UK's leading sweets and chocolate retailer

Like-for-like sales, which ignore the effect of new stores, fell 8.3% in the six months to 29 July. Losses widened to �64.9m from �20.2m a year ago.

Woolworths said it expected trade to pick up in the second half of the year after making "significant" changes.

The firm has revamped stores and plans to become the UK's leading children's toys and clothing retailer.

The group has also unveiled plans to concentrate on its online operations and hopes to place internet access points in its stores.

New focus

By relying on the "catalogue model" Woolworths hopes to encourage more customers to come into their stores to pick up their goods.

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Despite the slide in sales, the 97-year-old group remains the UK's eighth largest retailer and is the country's number one seller of sweets and chocolates.

Woolworths also hopes to capitalise on this by becoming the leading "celebrations" retailer in the UK, promoting sales of Easter, Christmas and other key holiday goods.

Independent Retail Consultant Theresa Wickham told the BBC the group was "very much caught in a squeeze", battling stiff competition from supermarkets which are increasingly targeting the non-food market, as well as online retailers like Amazon which are encroaching on its entertainment division.

"The Woolworths brand is very popular, but it is being caught in three areas - it's very strong in toys, entertainment and confectionary," she said.

"Its margins are so low as it's being squeezed in those three areas by supermarkets."

Entertainment lift

Although competition is stiff, Woolworths still managed to post a significant rise in sales at its 2entertain audio and visual publishing division and its home entertainment distributor unit EUK - buoyed by the release of the second series of Dr Who and the latest Little Britain DVD.

Elsewhere, the group also said the summer heatwave had resulted in record sales of outdoor goods.

However, these gains were offset by a decline in sales of indoor toys and a drop in customer numbers during the World Cup.

Woolworths also said the hot weather had had a negative impact on chocolate sales.

Looking ahead, the group said it was "particularly difficult" to forecast how it would perform over the key Christmas period.

"The recent rate rise on top of increasing household bills will hold back consumer confidence," the group said.