Book shop chain Ottakar's has said that trading remains challenging after seeing likefor-like sales dip 1.6 per cent in the first seven weeks of its financial year.
The company reported profits of £7.1 million, up from £6.1 million a year earlier, but down on earlier City forecasts of £8.9 million.
The fall - partly due to comparisons with strong trading in early 2004 - came after a disappointing Christmas season led to a profits warning in January.
Group managing director James Heneage said: " Ottakar's suffered from the same slowdown in consumer spending that has affected many other retailers, while the weather hasn't been that good either.
"However, last week was very good in the run-up to Easter and taking this into account, like-for-like sales would have only been 0.3 per cent lower."
Despite the tough start to the new financial year, Ottakar's said it remained confident of a positive trading outcome as it looks to benefit from more store openings and a continued focus on its cost base.
The group had 131 outlets at the end of the financial year in January with total selling space at 562,000 sq ft against 525,000 sq ft a year earlier.
Ottakar's said it was likely to open between ten and 15 shops in the current period.
A spokesman for the firm said: "It is still too early to say where these new shops will be located.
"However, our stores in the West Midlands are very successful and we will certainly be looking at the region as a potential area for future development.
Mr Heneage said he was optimistic of an improvement in trading conditions: "It's too early to call on trading for this year, but unlike the fashion sector, the bookshop sector tends to be more robust."
Mr Heneage said the publication of the latest instalment in the Harry Potter series, as well as new films such as Charlie and Chocolate Factory and a second Narnia movie, were likely to boost sales in the year ahead.
"The outlook remains positive - books are still a very sexy market to be in," he said.
The company added that a 17 per cent rise in its final dividend, to 4.10 pence a share, showed the confidence it had in its prospects.
In the year to January 29, Ottakar's saw sales rise by 12.7 per cent to £173.2 million with trading on a like-for-like basis ahead by 3.5 per cent.
Margins improved for a fifth year in succession as Ottakar's brought the product mix of 24 Hammicks stores - acquired in 2003 - more into line with the rest of the estate.
Mr Heneage pointed out the improvement in margins had also been achieved despite strong price discounting among rival chains over the year.
Mr Heneage also said the group was close to appointing a new marketing director to replace Paul Henderson who left earlier this year.
The group, which also parted company with its finance director Edward Knighton last November and lost two other senior managers in a shake-up in February, said the changes formed part of an overall restructuring to facilitate the next stage of growth.
The group also appointed former MFI Furniture director Michael Hitchcock as group finance director in January.