Ted Baker has reported a better than expected 18.4% drop in pre-tax profit in its interim results to £6m, buoyed by the performance of its UK arm.

For the 28 weeks to August 15, the group said trading in the UK offset a weaker performance in its overseas markets where conditions continue to be difficult.

At a group level, retail sales were up 15% to £61.3m, and the retail gross margin was 63.9%. Group revenue increased by 7% to £76.6m. Retail now represents 80% of total turnover.

In the UK and Europe, sales were up 16.6% to £56.1m. Average retail square footage rose by 16.1% to 203,325 sq ft.

Wholesale sales were down 16.3% to £15.3, partly due to the transfer of some wholesale accounts to retail concessions, and the closure of some accounts it said are no longer appropriate for the brand.

Founder and chief executive Ray Kelvin said: “The group’s performance in the first half of the year has been better than expected given the difficult trading environment. This trend has continued into the second half and whilst we remain cautious, given the uncertain economic outlook, the initial reactions to our autumn/ winter collections have been encouraging.”

The retailer said its store in Heathrow Terminal 1 opened in September and is performing well. Its Boston store is expected to open this month, and it will also open a second store in Melbourne, Australia, at the end of October.

It said the US remains challenging and sales were down 23.8% to $8m, which in sterling is equivalent to sales down 1.9% to £5.2m. During the first half it opened one outlet store in Orlando and it now has 8 stores and 2 outlet shops in the US.

Ted Baker has 18 shops and concessions in the Middle East and Asia and it said the stores continue to perform in line with expectations, and it will open a further shop in Taiwan.

Kelvin added: “We continue to benefit from our multi-channel distribution strategy and this, coupled with the strength of the Ted Baker brand and the support of our strong balance sheet, means we remain well placed to invest in the long term development of our business.”