New Look, the former womenswear star that is being stalked by its founder, Tom Singh, disappointed the City with poor Christmas trading figures yesterday.
The group, which has been in play since last July, said like-for-like sales plunged by 5.1 per cent in the seven weeks to 10 January. This was far worse than analysts had expected, prompting sentiment towards the group to weaken.
News that talks with Mr Singh and his venture capitalist backers, Permira and Apax Partners, were continuing helped to soften the trading blow and the shares rose 6.75p to 319p.
Stephen Sunnucks, the chief executive, said he expected to hear from the company's suitors "in the next few weeks", adding: "They wanted to digest Christmas and the Christmas trading statement first."
He denied that the protracted nature of Mr Singh's interest - first flagged last summer - was affecting the group and professed himself relaxed about the drawn-out timetable. "This process was not something we started. These things do take a bit of time," he said.
Mr Singh made an indicative approach at 348p per share in October, although the stock has consistently traded below this, suggesting that the City believes a bid at this level is unlikely.
Rival retailers, including Marks & Spencer, are already forming a queue to lure Mr Sunnucks away from New Look, although he declined to comment on his future plans yesterday. "My complete focus is on New Look," he said.
New Look said it had abandoned its plan of discounting to drive sales after data from the British Retail Consortium and the analysts FootFall confirmed that shoppers were resisting all temptations to shop. "More promotions made no difference, so we took the decision to trade cleanly and not bring the sale forward," Mr Sunnucks said. So while like-for-like sales deteriorated, gross margins rose by 1.5 percentage points over the Christmas period, reversing a 2 percentage point fall at the start of the autumn.
Most analysts were unimpressed. Gillian Hilditch, a retail analyst at Arbuthnot Securities, said: "New Look is having to discount to drive sales and is continuing to find trading extremely difficult."
Richard Ratner, at Seymour Pierce, suggested that the bid price could be slashed to as low as 325p per share, raising fresh doubts over whether institutional investors would be prepared to sell.
Mr Sunnucks blamed poor sales of "seasonal casualwear" - jumpers and coats - for the sales slowdown. But he said the group was enjoying "a record January sale" and insisted its prospects remained strong.