Fears for the future of Land of Leather increased today when the sofa chain said that takeover talks had failed.

Land of Leather saw its shares leap a few days ago when it revealed approaches to buy the company, thought to be from turnaround specialist Hilco and private-equity house Sun European Partners.

Today it said the mooted bids were inadequate. "Early stage discussions suggested that there would be insufficient value to shareholders so talks with potential bidders have been terminated," it said in a statement to the Stock Exchange.

Land of Leather has issued three profit warnings since last Christmas as trade has deteriorated. It saw orders halve in the three months up to November as consumers put off big-ticket purchases. The housing slump has also been bad news.

Directors have been fighting to keep the business going, agreeing to defer their salaries until there is a recovery.

The company listed in 2005, at one point seeing its shares hit £30.

It insists it has enough cash in the bank - £6 million - to work through the downturn. The shares fell 2p to 7p today, leaving the company valued at about £2 million.

It raised £13.5 million from a share sale in June, suggesting it is burning through cash quickly.