Ann Summers has plunged into the red with a full-year pre-tax loss of £3.6m and has abandoned plans to sell off its Knickerbox brand.

The loss compares with a pre-tax profit of £1.7m in the previous year.

The retailer, which is headed by chief executive Jacqueline Gold, said sales fell to £101m for the 12 months to June 28, 2014, down from £115m the previous year, according to accounts held at Companies House.

However, trading improved over the festive period at Ann Summers. Like-for-like sales were up 10.1% from November 23 to Jan 3.

Retail sales increased 5.7% while online sales jumped 24.6%. Its website represented 36% of total sales during the period, up 26% year-on-year.

Ann Summers, which operates through 141 stores, online, wholesale and party plans, said it had decided to retain Knickerbox, the brand it put up for sale last March.

Gold attributed the £3.6m full year loss to the “underperformance of certain parts of the business, which we have since recognised and addressed, and in part to the structural changes and investment we have made to secure future growth and success”.

She added: “As CEO, I have taken decisive action across all of our channels to ensure that growth and profitability returns to the business quickly.”

During the year Ann Summers injected about £1.5m into its party plan business, which hosts approximately 2,500 parties per week.

Gold said: “This level of change proved to be significantly more disruptive than we anticipated at the start of the year, not just for the party plan team, but for the whole business. The party plan business is beginning to show green shoots following the overhaul of the business that took place last year, and we are hopeful that this channel will continue to improve.”

In the first six months of its financial year, Ann Summers also invested more than £1m in refurbishing its stores. The retailer plans to roll out the revamp to the rest of its store estate over the next three years.

Ann Summers said it would continually review its retail estate over the coming months and years and would close loss-making stores and invest in new retail spaces.

The retailer is also focusing on its website in the next year and plans to trade internationally from its website in autumn 2015.

During the year Ann Summers launched the Giles Deacon designer premium collection of lingerie and range modelled by reality TV star Sam Faiers.