Whittard of Chelsea yesterday revealed that potential takeover bidders had walked away from talks to buy the struggling tea and coffee specialist.

The announcement comes a week after Whittard warned that the London bombings could impact on trading at some of its stores for months to come.

It also said last week that the attacks had led overseas companies to abandon takeover talks, but it has now emerged that other parties interested in the 125-outlet chain have also walked away.

The loss of a possible takeover premium forced shares down by 21 per cent in early trading, to add to the ten per cent fall of a week earlier.

The company is now worth £16.5 million.

Whittard, which has 125 outlets in the UK, did not reveal why the latest bid parties pulled out, but it comes after the company painted a weaker-than-expected picture of current trading.

The retailer said business in central London and at its tourist stores had been " materially affected" in a downturn that it fears may last until Christmas.

As well as the impact of the London bombings, Whittard said it had also seen lower footfall at its stores in retail outlet centres - a factor it blamed on customers being lured back to the high street by discounting.

That enabled Whittard to achieve a rise in sales at its high street and mall stores, although the improvement was achieved at lower margins.

Overall, Whittard said sales in the first 12 weeks of its financial year had been below its expectations.

It comes four months after it disappointed investors with lacklustre figures for the Easter trading period.