Sept. 21 (Bloomberg) -- Woolworths Group Plc, whose shares have had the third-steepest drop among U.K. retailers in the past year, said its first-half loss widened as higher living costs and the London bombings caused consumers to make fewer shopping trips.

The net loss was 41.2 million pounds ($74.4 million), or 2.9 pence a share, in the six months ended July 30, compared with 24.3 million pounds, or 1.7 pence, a year earlier, the London-based company said today in a Regulatory News Service statement. Sales declines moderated in the last eight weeks, Woolworths said.

With 806 stores located largely in U.K. town centers, Woolworths has been unable to escape from a reduction in consumer spending that has affected retailers including Kingfisher Plc, the owner of B&Q home-improvement stores, and Next Plc, the No. 3 fashion seller. Tesco Plc, the biggest U.K. retailer, yesterday said sales in its fiscal second half will rise at the slowest pace in two years as rising fuel prices add to the burden on consumers.

``We expect the environment to remain challenging and we are planning further cost savings, as well as improvements to the underlying value in our offer,'' Woolworths Chief Executive Trevor Bish-Jones said in the statement.

Revenue at stores open at least a year slid 4 percent in the half-year, though the decline moderated to 1.7 percent in the first eight weeks of the second half, Woolworths said. The company makes almost two-thirds of its sales and all its profit in the fiscal second half, which includes the Christmas holiday.

Takeover Target

Shares of Woolworths fell 1.25 pence, or 3.6 percent, to 33.75 pence in London yesterday, the lowest since May 9, 2003. The drop extended the stock's decline for the past year to 26 percent. Of the 40 constituents of the FTSE All Share General Retailers Index, only Kingfisher Plc and Homestyle Group Plc have fallen by more in the last 12 months.

Woolworths, which in April was cast aside as a takeover target by Apax Partners Worldwide LLP, said it incurred one-time costs of 1.2 million pounds in connection with the bid approach.

Sales at the Entertainment U.K. unit, which supplies music and DVDs to retailers including Tesco Plc, rose 19 percent in the first half, helped by new contracts to supply W.H. Smith Group Plc and William Morrison Supermarkets Plc.

Woolworths was founded in 1909 as part of its U.S. parent's expansion and is not related to Sydney-based Woolworths Ltd. or Woolworths Holdings Ltd., located in Cape Town, South Africa.

The company plans to pay a first half dividend of 0.41 penny a share, a 5 percent increase on the previous year.

To contact the reporter on this story: Paul Jarvis in London at pjarvis@bloomberg.net.

Last Updated: September 21, 2005 02:15 EDT