Fashion group Alexon is considering selling Bay Trading as a “back-up plan” after the young-fashion brand’s performance dragged down full-year group pre-tax profits.

Alexon chief executive Jane McNally declined to comment on speculation that it was touting Bay Trading in the market, saying only: “We are not actively out there but there is an option because Bay Trading is a separate company.”

Earlier this week Alexon was forced by the Takeover Panel to issue a statement on the Stock Exchange to say that it had rejected an offer for the company and that it had confidence in its turnaround strategy.

“There is space on the high street for a young-fashion retailer with a different handwriting, but we think it will take a while to communicate that position,” said McNally.

She said new stock had been well received and the brand needed “time to recover”. However, she added: “Given how tight the market is we have got to have a back-up plan.”

The Alexon group, which comprises brands including Alexon, Eastex, Dash and Ann Harvey, notched up pre-tax losses after exceptionals of £27.7m in the year to January 31, compared with £12m profit the year before. Turnover was down 4.5 per cent to £250.5m on like-for-likes down 9.1 per cent.

Bay Trading recorded a £7.2m loss against a £1.1m profit last year. Like-for-likes plummeted 16 per cent.