EBTM, the music-inspired online fashion retailer, has issued a profit warning for the year to April 2009, and is considering a disposal of all or part of the group as it suffers in the downturn.

Trading in its online retail division fell below management expectations, with net sales in December down 33 per cent year-on-year.

EBTM said that while conversion levels have been strong and ahead of previous periods, traffic and average transaction values have been down.

The retailer said the “general economic environment adversely impacted on EBTM's sales and gross margins during the key Christmas trading period” while trading in the wholesale division remains “challenging and unpredictable”.

It did however say the business was well-positioned to deliver accelerated growth.

In a statement the retailer said: “The financial performance of the company for the financial year to April 2009 will be materially below current market expectations. The disappointing sales in the key Christmas period, together with the ongoing challenging conditions in the wholesale division, have consequently had an impact on the limited financial resources of the company.

“The Board is therefore evaluating strategic options which may include a disposal of part, or all, of the group. However, there can be no assurance that an offer will be received or that any disposals will be concluded in which case the company may need to seek alternative short term funding options.”