Havelock Europa has announced plans to cut around 10 per cent of its workforce as it warned annual profit and revenue will be “materially lower” than current market expectations.

The announcement saw shares in the AIM-listed company tumble by almost 28 per cent in early.

The retail, education and financial services interior fit-out specialist employs around 400 at its headquarters and manufacturing plant in Kirkcaldy, Fife, plus a further 100 spread across sales roles in the UK, an office in Mansfield and in Shanghai, China.

Chief executive David Ritchie, who came into the job in May, said the decision to restructure came after he commissioned research into how customers viewed the company which suggested the business needed to make changes.

He said: “We had to understand a bit more what clients thought of us, both in terms of existing clients but also potential new clients. You want to grow the business and know why people spend their money.

“It was a mixed bag. There was a lot of good stuff about the quality of product we offer and [clients] like the company but sometimes they felt the level of service we provide wasn’t what it should be.”

Mr Ritchie confirmed that every area of the business would be looked at as part of the consultation to cut in the region of 50 jobs and make annual savings of £3 million.

He said: “No decision to reduce jobs is ever taken lightly, and we will do everything possible to support those colleagues affected.”

One area Mr Ritchie is keen to change is allowing people in the business to make customer decisions more quickly than they are currently able to do.

He said: “We are making it a much more lean approach so clients can get what they want faster. That is the main drive.

“There is no one massive silver bullet here. It is all about fine tuning what we are doing.”

Havelock said trading had been hit as a result of ongoing subdued demand in the retail and financial services sectors across its traditionally busy summer period.

Ciaran Kennedy, finance director said: “We have re-looked at our order books and come to the conclusion that for this year sales will be materially different to what we had previously got.

“In terms of the restructuring, it is about re-basing the company to a sales level where it can make consistent profits going forward and create quite a strong base from which to grow from again. That is what we are trying to achieve.”

Havelock is also selling its Teacherboards business to effectively exit the educational supplies market.

The Yorkshire based supplier of display boards and presentation equipment has been bought by Sundeala, which also makes boards, for around £1.4m.

Havelock had owned the business since 2004 with Teacherboards making £140,000 of pre-tax profit on sales of £4.4m in 2014.

Mr Kennedy said: “We felt it was better someone [else] took it forward and we could concentrate on the core business and getting Havelock right.”

Proceeds from the deal are to be used to reduce Havelock’s net debt, which stood at £3.1m on June 30 this year.

Mr Ritchie said the group is continuing to look at alternative market sectors and new customers.

Clients have included the likes of Alliance Boots, Lloyds Banking Group, Marks & Spencer, Primark, Virgin Money and House of Fraser.