Sales in Slovenia were down 3.8% but they rose 4.2% on its second biggest market, Serbia. The decline was greatest in Croatia, but Mercator did not disclose the exact figures.

The company attributes the drop in sales to declining purchasing power of consumers and the gradual discontinuation of operations in Bulgaria and Albania last year and early this year.

Mercator's struggles are also evident from the data on investments, which dropped 73% over the year before to just EUR 10.2m.

The company continued to deleverage, reducing its net financial debt by EUR 17.6m to EUR 990m, the first time since 2009 that the figure dropped below a billion euros, CEO Toni Balažič told the press.

"We must secure long-term operating profitability and complete financial restructuring by the end of the year," Balažič said, adding that talks were under way with banks on long-term debt restructuring.

The interim report shows debt maturity deteriorated compared to the year before, as long-term financial liabilities dropped to EUR 437m from EUR 594m, while short-term financial liabilities surged to EUR 647m from EUR 501m.

Despite the continued struggle, Balažič remains upbeat. "The strategy we framed at the end of last year is starting to produce results...Profitability has started to improve," he said.

Part of the improvement in profitability stems from cost optimisation, including staff cuts. Mercator had announced it would cut its workforce by up to 1,000, with Balažič saying that the goal has been almost achieved already.

"The number of sales staff has not decreased, but the number of back-office workers has and there were cuts where Mercator closed shops," according to Balažič.