Jeweller Theo Fennell more than halved its losses in the first half as takeover talks continue.

Sales plunged 8% to £4.9m, however losses narrowed from £1.4m to £610,083 over the half to September 30 as the jeweller made “substantial cuts” to overheads as part of its restructuring.

Theo Fennell chairman Rupert Hambro said losses were at their lowest level for four years.

The retailer said it is still in “ongoing discussions” with private equity firm EME Capital about a potential takeover.

Hambro said: “The major focus of the business is to increase sales which will return the company to profit. We continue to explore exciting opportunities for Theo Fennell in overseas markets including the Far East, Middle East and Eastern Europe.”

The retailer said that sales were lost during the summer due to the reduction in international customers over the Olympics.

Online sales soared 176% over the period, albeit from a low base, and it now accounts for 1.4% of the business.