Losses have spiralled at organic food specialist Abel & Cole.

The home shopping business, which delivers fruit and veg to middle class customers and is backed by private equity firm Phoenix Equity Partners, lost £27m in the year to last August compared to £3.5m in the previous 10-month reporting period.

Sales rose 3% to £31.7m in the year, but a £20m goodwill impairment and rising costs undermined profitability, the Daily Telegraph reported. Abel & Cole’s assets of £13.7m compare with liabilities of £39.6m.

Phoenix and founder Keith Abel – who has returned to run the business day to day – have had to conduct a debt-for-equity swap pushed through by Lloyds Banking Group, as revealed by Retail Week.

Abel & Cole finance director Ted Bell told the Telegraph that the refinancing had cut liabilities by £31m and that, although trading is still tough there were signs that a return to the retailer’s “core values” and a reduction in promotions were having an effect.