The gloom surrounding French Connection has deepened after the fashion chain revealed a 17 per cent fall in same-store sales in the UK.
The group, which has a store in Bullring, Birmingham, said it missed out on the latest fashion trends by concentrating on popular styles of previous seasons.
French Connection described the latest trading performance - covering the past five weeks - as "very disappointing" as it followed a 12 per cent decline in like-for-like sales in the year to January 31.
The group had pinned hopes of a recovery on its new-season clothing after a profit warning in November.
The poor performance of the firm best known for its controversial 'fcuk' branding added fuel to talk Icelandic investor Baugur may make an approach, or chairman Stephen Marks may use his 42 per cent stake to take the company private.
Mr Marks said conditions on the UK high street had been difficult, but the positive response of shoppers to recent additions to its ranges offered hope that the company was starting to turn the corner.
He said: "I can see signs of improvement and beginnings of a recovery.
"And, while it is still early days, we go forward feeling positive about the changes that are being made."
Measures to resuscitate sales have included a shake-up of the buying teams, an overhaul of how clothes are presented in stores and new ranges to strengthen its summer offering.
Spending on advertising in the UK has also been increased to beef up the nationwide billboard and magazine campaigns taking place this month and in April, which will continue to feature the "fcuk" logo that has been criticised by some analysts.
Annual profits of £33 million were in line with expectations after the group warned last year that it would not be able to match its haul of £38.7 million in 2003.
The group was forced to slash prices of its clothing ranges to shift excess stock, contributing not only to the profits fall but also a one per cent decline in turnover to £265.7 million.
Evolution Securities analyst Nick Bubb said the recent cold snap had fuelled fears of lower sales since the end of January.
He added: "We didn't expect them to be 17 per cent down, like-for-like."
He also noted the cautious noises being made about wholesaling of its latest ranges with repeat orders at a lower level than last year.
Although the response to the Winter 2005 ranges have been good, French Connection said its customers were reluctant to commit themselves to the range.
Some comfort was offered to investors in the form of a 54 per cent hike in the annual dividend to 5p, while ongoing takeover speculation also helped to prop up the price of French Connection shares.
Richard Ratner, of broker Seymour Pierce, said the current ranges were better and the company should have a "much better" second half to its financial year.
Numis Securities said that the real disappointment came from current trading, and while the clothing market overall has been weak in February, the numbers represented a significant underperformance against the market.
"The one support of the share price is likely to come from ongoing bid speculation," the broker added.
Shares in French Connection closed down 11.75p at 304.5p.