Shares in surfwear brand Hot Tuna tumbled 10% as it warned revenue has not met forecasts and cashflows are not expected to support the business through 2012 as it winds down business in the US.
The group said overall trading for the year end June had been disappointing as sales deteriorated across all of its geographic regions, particularly in the US.
"In light of the US performance, the board has started winding down US operations and expect all trading and overhead expenditure to have ceased by February 2012," the group explained in a company statement.
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Loss before tax narrowed to £768,000 in the year ended 30 June 2011 compared to a loss of £1.3m the year before. Operational cash outflows fell to £0.76m in the year from £1.37m due to tighter cost control. Revenue fell to £207,000 from £464,000 previously.
Commenting on the company's future, chairman Francis Ball warned, "While improvement has been made in avenues to market post financial year end with the launch of the ecommerce site www.hot-tuna.com and signing of an Australian distribution agreement, revenue has not met forecasts and cashflows are not expected to support the business through 2012."
The board, which decided to put the company up for sale in November 2011, said it is currently working with interested parties and is expecting to present a firm purchase offer to shareholders in January 2012.
"Although strong interest has been shown in the purchase of the brand to date, in the event of a sale not being achieved the board will investigate funding solutions and aggressive overhead cutting while working constructively with the Australian distributor," it said.
"In the event of a sale of the brand and business being successfully achieved, the board has indicated the company will remain as a listed 'shell', with the incumbent directors excluding Marcus Yeoman expected to step down."
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