Sept 23 (Reuters) - British fashion retailer Alexon Group Plc (AXN.L) posted a flat adjusted pretax profit for the first half as it was hurt by lower inventory levels, but said trading since the half year was encouraging.

Alexon Secret Garden Collection A/W 2010

The company, whose brands include Ann Harvey, Eastex and Dash, said like-for-like sales rose 3.1 percent for the first seven weeks of the second half, with some margin improvement.

"Despite the improved performance since the half year, we remain cautious about the second half given the uncertainty over the impact of planned government cuts and the expectation that the economic climate will remain tough for the immediate future," Chief Executive Jane McNally said in a statement.

For the 26 weeks ended July 31, pretax profit before exceptional items on continuing operations was nearly flat at about 1 million pounds ($1.6 million).

Revenue fell 10 percent to 69.7 million pounds as disruptions such as air transportation issues led to lower inventory levels.

Alexon shares, which have lost more than half their value over the past one year when consumers cut spending amid economic uncertainty, closed at 18.75 pence on Wednesday on the London Stock Exchange.

($1=.6389 Pound) (Reporting by Tresa Sherin Morera in Bangalore; Editing by Anne Pallivathuckal)