Sales at Kirkcaldie & Stains dropped by 2.7% in 2011.
The Wellington department store held its annual meeting in Wellington on Tuesday and managing director John Milford says it was a continual drop on the year before.
He says customer confidence is down, particularly in Wellington where Government changes have impacted on people's confidence and their ability to continue to spend the discretionary dollar.
Mr Milford says it is getting tougher to make cuts in expenditure without compromising services.
