RETAILER Littlewoods said its recovery was "well under way" as it showed it had cut its half-year losses and increased sales.

The group, which had been hit by tough competition on the high street, said pre-tax losses for the half-year to October 31 reduced to £9.9m, from £34.2m the same time last year.

The group usually makes a seasonal loss at the half-year stage and a profit for the full year.

Sales during the half-year rose four per cent to £898.3m, while like-for-like sales in its high street stores were up five per cent, helped by reduced prices and a refurbishment programme which has seen 80 out of its 119 Littlewoods stores revamped.

It has also been restructuring its business and has invested more than £30m during the half-year, including putting in new warehousing systems at its home shopping distribution centre in Shaw, near Oldham, developing better customer database systems and refurbishing stores.

It has also cut costs at its head office and last year axed 200 staff at its Liverpool base.

Littewoods said, since the beginning of autumn, it had been reaping the benefits of tighter management control and lower stock levels, and was now producing a more profitable balance of sales and margin.

It is also on track to record a "significant improvement in operating profits for the financial year."

Sales in the seven weeks to December 15 were flat, but margins improved, it said.

Chairman James Ross said: "It is pleasing to report that Littlewoods' business recovery is now well under way, after a difficult year for the group.

"Whilst there is still much to do to ensure that Littlewoods delivers its true potential, I am confident that we now have a strong management team in place to lead the company forward in the years ahead."

The group - a privately-owned company which was founded as a football pools business in 1923 by the late Sir John Moores - was also this year in talks to be bought by home shopping firm N Brown.