Walkabout owner Regent Inns said yesterday it saw no signs of a trading revival last month.

The company, which saw itself become a bid target after issuing a profit warning in December, said like-for-likes sales continued their descent in January.

The update came amid a flurry of takeover talk in the sector, with All Bar One operator Mitchells & Butlers currently a merger target for Punch Taverns, the UK's biggest pub chain.

Regent, which also owns Jongleurs comedy clubs, revealed like-for-like sales for the half year to December 29 were down 3.8 per cent on the year before - compared with a one per cent fall in the 14 weeks to October 6.

Pretax profit for the half-year fell to £1.2 million, down from £3.6 million.

But executive chairman Bob Ivell remained upbeat about the future.

He said: "Despite the immediate challenges to the sector presented by the banking crisis and its impact on consumer confidence, our brands remain strong and well-positioned to take advantage of a recovery."

He said there had been "a fair amount of interest" in the business and that discussions were taking place with interested parties. These are thought to include Alchemy Partners, the private equity group , Tiger Tiger bar operator Novus Leisure and Robert Tchenguiz's Laurel Pub Company.

Mr Ivell denied that Regent's move to release value from its freeholds and sell off none-core sites signalled that a sale of the business was unlikely.

"From our perspective it's an opportunity to tidy up the estate and release some cash," he said.

Regent has 63 bars in its Walkabout and Jongleurs estate, and another 31 Old Orleans sites. The estate includes 11 outlets in the West Midlands.

The group said that November and December saw a deterioration in market conditions across the sector.

Worst-hit were the Australian-themed Walkabout bars. "Celebrations in Walkabout appeared to be muted compared to last year, resulting in disappointing sales," it said.

The Jongleurs clubs had demonstrated an ability to trade "robustly" despite the high street conditions, Regent added.

And a refurbishment programme for the Old Orleans bars and restaurants had seen sales at the updated premises soar by nearly a fifth, the firm said.

Discussing January's low levels of activity, Regent said: "Traditionally the month with the lowest absolute level of sales in the year, January has seen a continuation of the trends experienced in the last nine weeks of the first half. We strongly believe that this is attributable to the slowdown in consumer confidence and the impact of the smoking ban in the winter."

Regent said on January 15 it had received a number of offers for the business. Discussions about the deals were on-going, the group said.

Altium Securities' Greg Feehely said the immediate outlook for the business remained "very challenging", and shareholders would best served by a takeover.

He said: "All told it is a pretty tough situation, with the best outlook for shareholders being a successful competitive auction process for the business."

Other pub companies, including London Pride brewer Fuller, Smith and Turner, and Greene King, have also blamed lower sales recently on the smoking ban and higher interest rates. Regent shares closed down 1.75p at 17.5p.