Homewares retailer Habitat will launch its next generation of stores this year in an effort to revive flagging sales and profitability.

For the year to March 25, 2007, Habitat recorded a pre-tax loss of£10.9 million, compared with a loss of£3.7 million the previous year. Its like-for-like sales tumbled 10 per cent over the period, according to accounts filed at Companies House.

Habitat UK country manager Ruth Dangerfield, who joined from fashion retailer Diesel in May last year, has implemented several changes to turn around the business.

The retailer said that trading in Habitat’s new stores has improved by more than a third in the past nine months and sales are up 4 per cent year on year. It maintained that further growth is expected when the next generation of stores open this year.

The new-format stores give a nod to the legacy of its founder Sir Terence Conran in terms of style and contemporary design. The focus is on store experience and Habitat wants to reinforce its design credentials by working with both established and undiscovered designers.

Dangerfield has also overhauled the Habitat management team, having replaced about 60 per cent of senior employees.

Next month, Habitat will open the first of its next-generation stores at Barton Square in Manchester, followed by a store at Westfield London in White City this autumn.

Dangerfield said: “We have worked really hard in the past nine months to give Habitat the buzz shoppers are talking about. It is great to see our stores, products and people really taking off.”

During its last financial year, Habitat opened a store on Regent Street, relocated its London Finchley Road and Cambridge shops, and closed its Southampton, Batley, Bluewater and Tunbridge Wells branches. It also refurbished its Edinburgh and Hatfield stores.