Jersey-based Flying Brands, the online retailer of gardening and entertainment gifts, issued its third profits warning of the year yesterday, sending its shares tumbling and adding to losses incurred by its biggest investor, the Scottish businessman Sir Tom Hunter.

As Flying Brands warned that "in the absence of any further action" it would breach its banking covenant test in mid-October, the company's shares crashed by 7.25p, or 39 per cent, to 11.5p.

As a result, Sir Tom, who owns 26.9 per cent of the listed home shopping specialist, has seen his stake in Flying Brands for which he paid £23.6m in November 2006 dwindle in value to less than £1m.

Since hitting an all-time high of 324p on 1 December 2006, the company – founded in 1981 originally as Flying Flowers and listed on the London Stock Exchange in 1993 – has largely been on a downward trajectory in the face of a tough, economic climate and stiff competition.