The Flensburg-based German business posted a loss for the first half of the year, with pre-tax losses of €6.1 million – after a profit of €686,000 in the same period of 2009.

The company played a large part in enabling the sexual revolution in post-war Germany, supplying sex education material as well as condoms and sex toys under plain cover by post.

Named after its founder, Beate Uhse became a huge player in the erotic industry in Germany and abroad, but is now trying to alter direction towards more lifestyle products, a change which is taking longer than anticipated, the company said on Friday.

“To be realistic, the transformation to a lifestyle company for eroticism will, from today’s viewpoint, take another two years,” said chairman Serge van der Hoof.

Turnover was down by 12.3 percent in the first half year, to €96 million. The company gave a profits warning too, although financing is secure.

The previously strong DVD sector has shrunk dramatically in the face of competing free sex films available on the internet.

New products such as bedclothes and towels have been introduced as part of the new concept, while the mail-order business has been split into ‘soft’ and ‘hard’ sections, although this has not helped performance.

Sales in the 258 erotic shops across 11 countries have also drooped, with turnover down by €3.6 million to €26.6 million.