Theo Fennell has vowed to restore the eponymous retailer he co-founded to its roots as a design-led jeweller after returning to the board and increasing his stake.

The creative force behind the jeweller, whose star-studded clientele includes Elton John and Liz Hurley, rejoined the retailer this week after he was forced out of the business in February last year over differences in opinion about the direction the company was taking. He became a consultant to the business in February this year.

He told Retail Week that he had been frustrated by decisions taken over the past year to expand the retailer both geographically and into more commoditised areas.

“The business was forgetting its design heritage and integrity,” Fennell said. “We don’t do the big brand – that is not what we are about and we don’t have the resources and name to do it. By trying to turn into something more high street and commercial, it didn’t work for us.”

Fennell said that “the proof in the pudding was in a year which wasn’t great”. The retailer notched up first-half losses of £840,000 compared with a profit of £434,000 the year before. It is expected to have made pre-tax losses of £2m in the year to March 31.

Fennell’s return as creative director comes three months after the reappointment of Barbara Snoad as chief executive, who was replaced by Pamela Harper in December 2007. It also comes after talks with a mystery investor collapsed.

Former Hamleys chairman Rupert Hambro has become chairman, after the resignation of co-founder Richard Northcott – who retains a 16.4 per cent stake – and hotelier Alasdair Hadden-Paton has become deputy chairman.

Together with Fennell, who upped his shareholding to 19 per cent from 15 per cent, management has a 29.9 per cent stake in the jewellery retailer.

Fennell will drive sales by broadening the retailer’s range of affordable silver jewellery and focusing on high-end products for customers looking for a long-term investment.