The company’s total net revenue for the seven weeks from September 7, 2008 to October 26, 2008 was 10 per cent down on the comparable period last year.

This compares with an increase in total net revenue for the first 10 weeks in the second half, as reported in the interim announcement on September 15. As a result, cumulative net revenues for the first four months of the second half have fallen to three per cent below the previous corresponding period, significantly short of expectations.

In the remainder of the critical final quarter of the year, when trading is traditionally stronger, the board anticipates a lower than expected gross margin from the sales mix which, in addition to the reduced sales levels, will have an impact on profitability.

Together with higher than budgeted overhead costs of £0.9 million, the board anticipates a small trading loss for the year to December 28, before taking charges of £0.8 million for stock provisions and £0.9 million of exceptional costs, £0.6 million of which represents cash held on deposit with Kaupthing that the board considers unlikely to be recoverable.

The company’s cash balance at October 26, 2008 was £5.7 million and the board anticipates that the cash balance at December 28, 2008 is expected to be about £9 million.

The company expects to report its pre-close trading update for the year to December 31, 2008 in mid-January 2009.