Shares in value meat retail chain Crawshaw Group (CRAW) plunged more than 12% today as its first-half losses widened on the back of the devaluation of sterling and investment in lowering prices in an attempt to lure back customers.

A 10% drop in the value of the pound took 1.5% off the gross margin and lower prices reduced it by another 1%.

Pre-tax losses for the 26 weeks to 30 July 2017 were £1.2m, compared with £400,000 a year ago.

Crawshaw, which revealed a new partnership with 2 Sisters in May, is fighting to turn the business around after a dramatic slowdown in footfall to stores last year as the supermarkets became more competitive in the meat aisles.

Like-for-like sales in the half declined by 4.2%, an improvement on 4.4% 12 months ago, with momentum building across the period from a 5.1% fall in the first quarter to 3.2% in the second.

Customers numbers were also down 3.5% year on year, with a big improvement from the first three months of the financial year, when they were down 5.6%, to the second, down only 1.1%.

Food-to-go sales were also back in growth after recovery actions taken in the previous financial year.

Group sales for the half increased 2.3% to £22.1m as the business opened another of its new factory shop formats, with four more planned by the year end.

CEO Noel Collett said: “These results demonstrate progress in ensuring we have high quality products at the lowest possible prices. The improvements to the breadth, depth and price of our ranges are driving the significantly improving trend in customer numbers, which is a key metric of loyalty and success in preparation for the important winter and festive season ahead.

“As part of our focus on achieving unbeatable value, we are prioritising and accelerating the rollout of our proven factory shop format. The economics of these sites are hugely attractive, and they allow us to offer a wider range of fresh meat and associated products at a price not possible in our high street shops.

“We remain excited by our 2 Sisters supply agreement and believe this partnership will be transformational for the long-term growth of the group. Market conditions remain challenging, but we are confident that our focus on value leaves us well placed for the long-term.”

Chairman Jim McCarthy, the former Poundland boss, added: “Since joining Crawshaws earlier this year, I have been impressed by the progress that Noel and the team are making. The accelerated roll out of the successful factory shop format is strengthening the business’s reputation for delivering amazing value, which is underpinned by the transformational supply agreement with 2 Sisters.

“Crawshaws is one of the most exciting businesses in the value sector and the board is confident that all the work done this year means the business is well set to create value for investors.”

The positive customer and sales momentum has continued into the third quarter, with customer numbers for the first six weeks of second half returning to growth, up 5.4% on the prior year. Like-for-like sales for the same period are tracking at -1.1%.

But margin pressures from the continued weakness in sterling remained and Crawshaw has chosen not to pass on the resulting price increases to protect its recovery momentum.

The City was less than impressed with the recovery, with shares slumping also 12.6% to 18p. The share price hit historic highs of more than 90p back in November 2015, growing from just pennies in 2013 as the group expanded its footprint in its Midlands and Yorkshire heartlands.