The chairman of Woolworths today launched his latest plan to save the High Street chain just a month after its chief executive was ousted.

Richard North said he will switch focus from larger, old Woolies stores to more popular smaller sites. He also ripped up plans to sell the firm's 40% stake in DVD business 2entertain. the rescue plan came alongside yet another profits warning from Woolies after a dramatic slump in sales over the last six weeks.

It shocked the City as it came while the hunt goes on for a successor to Trevor Bish-Jones as chief executive who is due to leave in the autumn after six years in charge.

North said: "The board is continuing its search for a chief executive to take the group on to the next stage of its development.

"In the meantime, we have begun the detailed work that needs to be carried out to rebuild the retail business around the core of more profitable small and medium-sized stores."

Woolies admitted like-for-like sales at its stores have tumbled 6.7% in the last six weeks. It dragged group sales down 3.1% in the first six months of the year at a time when margins also fell sharply. Woolies shares, which have lost three-quarters of their value in the last 12 months, fell 0.34p to 6.15p today.

"The retail business has seen a marked worsening in conditions in June and July in an increasingly competitive market," said North.

"This is reflected in the sales figures for the last six weeks. In addition, sales over the first half have been achieved with a disappointing margin performance."

Woolies said 2entertain, which it owns through a joint venture with the BBC and is looking at selling for around £200 million, was trading stongly with sales up 12.8% in the first half.