The shares slumped 20 per cent to 26p when the company said its first- half profits would be lower than last year because of the strength of sterling and poor trading at its fresh produce and North American divisions.
In a further blow to investors, the potential buyer of the group's seafood operations has walked away, meaning the company will now be able to return only limited funds to shareholders. Albert Fisher had hoped to sell the seafood business for around pounds 100m.
Although talks had reached their final stages, the terms were affected by the current ban on imports of prawns from India. Albert Fisher is now expected to cut its dividend, which currently yields more than 14 per cent.
Analysts said the group could become a bid target again, either from an opportunist financial buyer or from Chiquita, the American banana group which pulled out of bid talks last year.
One analyst said: "I am speechless. What can you say about this company? Stephen Walls has been a disaster and his position had become untenable."
Mr Walls, the executive chairman who has failed to turn Albert Fisher around after five years, has stepped back to the position of non-executive chairman. He will receive an annual remuneration of pounds 110,000 for just four or five days a month. "That is a disgrace," said one analyst. "His tenure has been a disaster and he should have walked."
Albert Fisher shares have underperformed the market by more than 80 per cent since Mr Walls took over the executive chairmanship five years ago. He had intended to stay on until the sale of the seafood business had been completed along with the share buy-back.
Neil England, who took over as chief executive a year ago, said: "It has been disappointing but the strategy remains unchanged - to move away from commodity ranges and towards higher-margin, added-value products and to spread risk while improving the quality of the management."
He denied the company was past saving: "Absolutely not. It can definitely be turned around, though some parts will take longer than others."
Analysts have reduced full- year profit forecasts from pounds 42m to pounds 34m. The fresh produce division has been hit by higher than expected start- up costs of a new citrus venture in Uruguay. Its north American operations have been undergoing big management and operational changes and markets have been hit by high raw material prices.
Ian Quinlan, finance director, has been made chairman of the group's north US operations and will spend much of his time there.