Body Shop International's turnaround hopes have been dealt a blow by disappointing UK sales.
The company has blamed less discounting and tough trading conditions, particularly in London, for the 8 per cent like-for-like decline in the three months to May 31.
Across the business worldwide, comparable sales were 3 per cent lower as demand remained sluggish in Germany, southern Europe and Japan, it added.
Body Shop told investors at the company's annual meeting that it would respond to the conditions by continuing to focus on operational efficiencies.
That strategy, introduced as part of a programme of restructuring, helped Body Shop to announce a 76% increase in annual pre-tax profits in April.
But the company, which has more than 300 outlets in the UK and Ireland, said the new financial year had been challenging on the high street.
Chief executive Peter Saunders told shareholders: "In our results announcement, we stated that the economic outlook throughout the world and in many of the countries in which we trade was weak."
"We continue to face a challenging retail climate that has led to a decline in customer traffic."
Despite the pressures Mr Saunders said the firm's efficiency drive was continuing to produce returns ahead of last year and budget.
He added: "Our focus remains on improving operational efficiencies. Given the difficult trading environment, our plans remain conservative, and we anticipate a modest improvement in performance for the year as a whole."