Clothing retailer Monsoon has delivered a double blow to its investors when it warned on profits and said its chairman was no longer interested in a takeover.
Shares in Monsoon slumped following the collapse of eight months of talks with Peter Simon over the potential purchase of the 24.6 per cent stake that his family did not already own.
Monsoon, which also runs Accessorize, gave no reason for the demise of the discussions but Seymour Pierce analyst Rhys Williams said there was always "a significant gap to bridge in terms of price".
Seymour Pierce analyst Richard Ratner added: "I suspect at the end of the day he Simon would have liked to have bought it but with all the hedge funds in there that he wasn't prepared to pay, given trading, a huge amount for it."
The retailer, which has 14 outlets across the Midlands, was worth around £695 million at the start of trading but its value plummeted by around £62.8 million after Mr Simon pulled out of the talks.
Monsoon was one of the leading lights of the retail sector early last year as teenagers and young women continued to spend on fashion despite cutting back elsewhere.
But trading began to deteriorate in the summer and Monsoon conceded in January that it was stuck with a glut of stock ahead of its winter sale after like-for-like sales growth failed to match its expectations.
Monsoon said: "Since that statement trading has continued to be very difficult. Like-for-like sales in the past ten weeks have been down four per cent and new stores have been disappointing."
This meant that its results for the year to May 27 would be "adversely affected", although Monsoon insisted that it should at least match the £53.1 million profits that it banked in the previous year.
Seymour Pierce pencilled in £56 million profits for this year but believed the company would see a recovery in earnings over the following 12 months to £68 million as it benefited from the addition of new space.
Monsoon has expanded rapidly over the past year including the acquisition of 47 new stores from retailer Etam.
It owns more than 388 outlets trading as Monsoon and Accessorize in the UK, while international operations comprise 299 stores in 35 countries.