Entertainment products distributor MBL Group swung into the red in six months ended 30 September, after losing a major customer which accounted for 79% of turnover earlier in the year.
Morrisons, which had been MBL's biggest customer, formally confirmed in March that it would terminate two supply agreements with the firm in September, a move which caused MBL significant income loss.
"During the following six months, MBL substantially downsized its operations and attempted to unwind the working capital position relating to this customer. The suddenness of the withdrawal, however, left MBL in a position in which it was incurring the significant payroll and overhead costs which previously supported this customer," the firm said.
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Sales for the period decreased from £71.1m to £15.7m on a like-for-like basis, leading to a loss before tax of £7.2m, compared to a small profit of £0.7m for the same period a year ago.
Earnings per share turned from a modest profit of 2.9p to a loss of 43.9p.
Although no dividend was paid, the firm, which continues its process of downsizing, was keen to emphasise that it still debt free.
Chairman Peter Cowgill said: "During this period, a substantial downsizing has occurred and post the period end two subsidiaries, Global Media Vault and MBL Guernsey PCC, have been sold and the activities of one subsidiary, Outnow Home Entertainment, have been discontinued.
"The board is committed to stabilising the business following the damaging events of earlier this year and we shall provide an update on headline performance in late January 2012."
NR
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