Poor Christmas hits jeweller to the stars Theo Fennell
on 11/01/2013 08:26:42
The group - whose customers have included Elton John, Victoria Beckham and Lady Gaga - saw a slump in international and UK customers over the all-important festive period as poor consumer confidence took its toll on luxury spending.
Theo said the weak Christmas trading would leave full year results "materially" below management expectations, but it hopes ongoing action to cut costs will help limit losses.
The warning came as Theo Fennell's private equity suitor was given yet more time to hammer out a deal by the Takeover Panel, which extended the deadline for a firm offer to February 22.
Theo revealed it was in discussions with EME in early September, which sent its share price soaring by 28% in one day.
The group, which sells jewellery designed by its founder Theo Fennell, who still owns 16.1% of the company, has been suffering from poor consumer conditions and said last month that sales fell 8% to £4.9m in the six months to September 30.
Theo - whose stores include a flagship outlet in Fulham, west London, a shop in Mayfair and concessions in Harrods and Selfridges - saw shopper footfall badly impacted by the Olympics over the summer months as the Games kept customers away from its West End stores.
Today's update confirmed conditions have failed to improve since London 2012 as Theo blamed weak sales on "a challenging UK consumer market, an uncertain economic environment and a lack of footfall to the stores".
But cost cutting drove losses down to their lowest for four years in its first half, more than halving to £610,083 from £1.4m a year earlier, and Theo said this will continue to mitigate losses over the full-year.
The group also plans to boost its online offering after seeing strong internet sales over Christmas and will grow its international wholesale business as it looks to tap further into luxury markets across the Far East, Middle East and Eastern Europe.
Theo Fennell has failed to make a profit since 2007-08 and recently said wider economic uncertainty had been holding back its international expansion plans, as talks with potential partners have been taken longer than expected.
The company sells jewellery at prices ranging up to £250,000 or more per piece, while it plans to launch a new diamond collection next spring.