Department store David Jones has seen profit dive 39% for the first half of fiscal 2019.
Profit was at $36 million for the December half, with expectations soft consumer spending will persist into the new year.
Parent company Woolworths Holdings confirmed sales had already fallen 3.1% in the first two months of the second half.
Woolworths CEO Ian Moir said tough trading conditions, as well as the redevelopment of its Sydney flagship store, disrupted growth.
“It’s a tighter environment, a tough environment, and we don’t see that changing soon," Moir said.
“The housing market continues to cool, so the level of competition, the level of promotion is not going to go away."
David Jones' total sales in the 26 weeks to December 23 were up 1% to $1.1 billion, or up 0.9% on a like-for-like basis.
The departments store was acquired by Woolworths for $2.1 billion in 2014.
Moir has assumed control of the business, following the shock resignation of CEO David Thomas this month.