Shares in Austin Reed lost nearly a fifth of their value on Thursday after the company revealed a big drop in sales in recent weeks.

The retailer - best known for its traditional suits and formalwear - said sales across the group had dived 11% in the past month compared with the same period last year.

The news unnerved investors, who marked Austin Reed shares down 18% to 102p at the close.

"It was a very difficult August and trading has not been good in the last five weeks," said chief executive Roger Jennings.

"It's difficult to judge how much of it is down to market factors but we are cautious. After a performance like that we have to be."

New ranges

Austin Reed said it would be stepping up promotional activity as a result of the recent sales slump.

The group also said it be launching a new skiwear range this autumn, and would also be introducing a new fragrance range for men and women.

The trading update was given as the retailer unveiled an 8% rise in pre-tax profits to £2.7m for the six month period to 10 August.

Sales over the period were up by 3%.

The firm has been branching out into casual wear and it said sales at Austin Reed casual wear and Country Casuals Petite - a clothing range for women under 5ft 4in - had performed well.

It also said that the refurbishment of its main Regent Street store was on target and should be completed by mid-2003.