Shares in Jessops, the camera shop chain, dived by more than a quarter this afternoon as it issued its second profit warning in seven weeks.

The chain, Britain’s biggest photographic retailer, said that demand for digital cameras, after a dire December, had deteriorated even further in January.

As a result, it is slashing its prices and margin targets to try to sell stock, raising provisions for unsold stock by £2 million and more than halving its target for full-year profits from £17 million to £6.5 million.

It has also begun talks with its bankers, HSBC, to try to renegotiate the terms of its overdraft facilities.

Chris Langley, chief executive, said the company had just seen sales data for January which showed that the bottom had fallen out of the UK digital camera market as a whole.

Sales of compact digital cameras fell nearly 11 per cent by value, and camcorder sales were down nearly 17 per cent.

Even growth in sales of larger SLR digital cameras for professionals had slowed from 30 per cent a month last year to 14 per cent.

Mr Langley said: “What has surprised us from this latest data is the speed with which this market appears to have deteriorated and it is very disappointing to have to revise our forecasts down so significantly.”

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