USC, the fashion chain owned by Sir Tom Hunter, made an operating loss of £8.8 million last year.

The fall was despite an increase in turnover to£105 million in the year to January 2007, from£100 million in the previous year.

A spokesman said: “We have seen a lot of progress. You don’t turn a ship quickly, but there are positive signs that we will get into profitability within two to three years.”

The retailer is reducing the space devoted to womenswear to just 25 per cent to concentrate on its menswear offering.

USC is considering selling mp3 players and music in an attempt to become a lifestyle and sports brand for men.

The 60-store chain employs about 2,000 staff and was bought by entrepreneur Hunter in 2004.

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