Shares in Laura Ashley Holdings slumped more than 17 per cent after the British fashion retailer said clothing sales in its home UK market suffered a sharp decline in the first half of the year.
Laura Ashley, best known for its flowery fabrics, said in a statement that like-for-like fashion sales fell 36 per cent in the UK in the six months to end-July.
However, same-store home furnishing sales rose 3 per cent and now account for 77 per cent of the firm's total UK retail sales.
At noon the stocks was off 15.7 per cent to 14-3/4 pence, having hit a low of 14-1/2p, to value the company at around £110 million.
"It will be a long, hard slog to resurrect the fashion division, and on its current rating we must maintain our negative ("underperform") recommendation," analyst Mr Rhys Williams of brokerage Seymour Pierce wrote in a research note.
The company had hoped a new design team under ex-Dior and Givenchy designer Mr Alistair Blair would revive the interest of fashion-conscious shoppers who seem to have fallen out of love with its romantic, floral prints - originally inspired by an Audrey Hepburn headscarf in the 1950s.
The firm, one of the first to mix fashion and homewares, reported a first-half pretax loss of £1.2 million on a 14 per cent fall in group turnover to £118 million.
The group plans to increase the number of stand-alone home furnishings stores to 50 from 34 by the close of its financial year at the end of January. Laura Ashley said it had "an unusually challenging" August but this was "not indicative of our expectations for the second half".
Like-for-like sales in the 33 weeks to September 18 were broadly in line with the first half, it added. British retailers have complained that a soggy summer kept shoppers off the high street, while rising interest rates squeezed their budgets.
Fashion retailer Next defied the trend with a 30 per cent rise in first-half profits last week.
Laura Ashley cut its operating costs by £7.1 million by closing underperforming stores in continental Europe and expects further reductions from more closures through 2005/06.