Just Group, an Australian clothes retailer, cut its earnings forecast for the 2008 financial year by as much as 12.6 percent, hit by sluggish consumer demand, but said it still rejected a takeover bid from billionaire Solomon Lew.
Its shares fell as much as 11.6 percent to a two-year low of A$2.81 after the announcement.
Australian retailers have struggled this year as consumer confidence has slumped to its lowest in 15 years, shaken by rising living costs, petrol prices and interest rates.
Just has rejected a cash-and-shares bid from Lew's Premier Investments, worth around A$830 million (US$790 million) based on Tuesday's closing share prices, as too low and opportunistic given the soft environment for retailers.
The company, which has 880 stores and brands including Just Jeans, Portmans and Dotti, on Wednesday cut its pro forma earnings forecast for the year to July 26 to between 29.2 and 30.6 cents per share, from previous guidance of 33.4 cents.
"Consumer spending has been weaker than was anticipated at the time of the target's statement (in June)," said Just Group Chairman Ian Pollard in a statement.
Just said it was well-placed to adapt to softer market conditions and would take action to counter it, including cost controls, inventory management and operating efficiencies.
It said an independent expert had reviewed the revised forecast, and reconfirmed its original conclusion that the bid from Premier was neither fair nor reasonable, and continued to materially undervalue Just and its long-term potential.
Premier is offering A$2.20 in cash and 0.25 Premier shares for each Just share.