Bloomberg) — Beate Uhse AG, the operator of Europe’s largest chain of sex shops, is betting peepshows are on their way out and plans to attract female customers by remodeling outlets to resemble department stores.

“There is no future in the booths,” Chief Executive Officer Otto Christian Lindemann told an investors conference in Frankfurt yesterday. Oils, lingerie and sex toys are pushing girlie films and magazines out of stores and into the company’s Internet and mail-order operations, he said.

Beate Uhse has fallen 85 percent since its initial public offering nine years ago, as the Internet has made video pornography more accessible to consumers in the home. The stock today gained 5 cents, or 4.8 percent, to 1.10 euros. The Flensburg, Germany-based company has a market value of 78 million euros, compared with 1.5 billion euros in May 1999.

Beate Uhse has closed more than 20 unprofitable shops in 2008, Lindemann said. As many as 35 outlets may be shuttered by the end of the year, the company has said. Two types of stores, one geared toward women and the other to men, will supplant the traditional male-dominated sex shop.

“Profitable outlets that don’t fit into either concept will become no-name shops,” without the Beate Uhse logo, Lindemann said. At the end of the first half, the company operated 152 shops and franchised another 127.

First-half sales dropped 5.6 percent, Beate Uhse said last week. Net income fell one third to 3 million euros. Lindemann said he expects pretax profit for the year will approach 5 million euros. The company forecasts sales 3 percent lower than last year’s 268 million euros because of the shop closings.

The company was founded by Beate Rotermund-Uhse, who took it public in 1999 and died in 2001. Rotermund-Uhse began selling condoms by mail after World War II, during which she ferried aircraft to the Russian front for the Luftwaffe.