Theo Fennell sees the sparkle fade over the Christmas season

The group, whose customers include Lady Gaga, Elton John and Victoria Beckham, 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 Fennell said the weak Christmas trading would leave full year results “materially” below management expectations.

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 Fennell, which has concessions in Bradleys in Harrogate and York, revealed it was in discussions with EME in early September, which sent its share price soaring by 28 per cent in one day.

The group, which sells jewellery designed by its founder Theo Fennell, who still owns 16.1 per cent of the company, has been suffering from poor consumer conditions and said last month that sales fell eight per cent to £4.9m in the six months to September 30.

Shopper footfall was badly impacted by the Olympics over the summer months as the Games kept customers away.

The 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”.

The group plans to boost its online offering.