Shares in Blacks Leisure plunged in early trading after Sports Direct withdrew its interest in buying the struggling retailer.

The group's share price fell by 27.78 per cent to 1.62p at 9.08am after the sportswear brand, Blacks' biggest shareholder, pulled out of its possible bid for a full takeover. Shares had recovered to 2.00p at 10.00am.

The outdoor goods retailer saw its shares plummet by nearly 50 per cent on 7 December, when it confirmed it had run out of options and put itself up for sale.

Blacks said Sports Direct, which already owns a 22.5 per cent stake in the group, had expressed an interest in a takeover.

But Sports Direct, owned by Newcastle United Football Club chairman Mike Ashley, said today that 'after careful consideration' it had decided against an offer but remained a 'committed and supportive shareholder'.

Investors have gradually abandoned Blacks and the group's shares have fallen from around 42p in January this year to their current level.

Conversely, Sports Direct investors were encouraged by the news, with the high street retailer's shares shooting up 8.37 per cent, or 15.90p, to 205.90p at 9.26am. 

Sports Direct announced its interim results for the 26 weeks to 23 October yesterday, and saw revenue jump from £819.9 million for the same period last year to £886.6 million. Profit was almost unchanged on £100.3 million against £100 million for 2010.

Ashley will reportedly receive a £12 million bonus if the retailer can meet a series of targets over the next four years.