falls further as City nerves continue

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The Independent Online failed to win back the City's confidence yesterday despite issuing bullish financial targets. failed to win back the City's confidence yesterday despite issuing bullish financial targets.

Shares in the online retailer dived 4 per cent to 94.5p, accelerating the decline that has wiped more than £100m off its market valuation since its third-quarter figures last Thursday re-ignited concerns over its spiralling cost base.

In a statement intended to soothe investors' frayed nerves, said it would report core earnings of between £26.7m and £31.7m for the year to the end of September and between £55m and £65m next year. It reported losses for the three months to June of £17m, up from £12m.

Brent Hoberman, the chief executive, denied being pressured into issuing the statement. Analysts were last week highly critical of the company's reluctance to outline how much it expected costs to rise. "The market wanted greater clarification of our numbers. We felt a tighter range would help people," Mr Hoberman said.

Analysts said the share price reaction reflected the revelation, after the stock market had closed on Friday night, that Clive Jacobs, its former vice-chairman, had sold down his stake in the business. Mr Jacobs, who quit in June, was awarded a 3.5 per cent shareholding in last year after selling his holiday autos car brokerage business to the travel company. said Mr Jacobs remained a "substantial" investor, with "just under" 3 per cent of the company.

The retailer, which plans to axe 350 jobs next year and close 10 of its 25 European offices, also sought to shore up confidence in its business model. "Our business model continues to show accelerating growth and underlying solid margins," Mr Hoberman said.

The acquisitive company, which has been criticised for buying market share, insisted it had plenty of cash.

" also confirms that it has sufficient working capital for the foreseeable future," it said, pointing to its net cash pile of £65.4m at the end of June. It will spend £16m this quarter on its previously announced acquisition of its German namesake,, and on cash exceptional items. But it has a £10m overdraft, it added. It expects to have a year-end cash balance of £70m, setting it up for its seasonally weak first quarter, which will see £20m flow out of the business.

Mr Hoberman blamed the drop in the company's valuation - its shares were worth more than 300p at the end of last year - on negative "sentiment" towards the online travel sector.

Ebookers,'s quoted UK rival, issued a profit warning that wiped more than one-third off its valuation, while last week, the US owner of, InterActiveCorp, cut its own forecast for 2004.