Prada in sales slump shock

Could London be falling out of love with Prada, the hugely influential fashion house that counts Liz Hurley and Kylie Minogue among its regular customers?

British sales of Prada's highly coveted range of handbags, shoes, and clothes have fallen for the first time since the legendary Milanese company first arrived in London in 1997.

The surprising reverse, although not great in terms of sales, is symbolic for the "cooler than thou" label that has quickly established itself as the epitome of well-groomed glamour.

Its stores on Bond Street, Sloane Street and at the Royal Exchange in the City are regarded as temples of sophistication by its loyal customers, who include swathes of the capital's international A-list celebrities. But latest accounts for the British subsidiary, Prada Retail UK, show sales in 2002 slipping by £ 400,000 , abruptly ending five years of unbroken and spectacular growth. The figures also reveal that the company has had to lay off 19 members of staff to cut costs.

The shops, famously guarded by some of the snootiest doormen in London, suffered badly in the aftermath of the al Qaeda attacks on New York, when conspicuous consumption suddenly fell out of fashion, the accounts reveal.

The stunning sales growth, which included a quadrupling of revenues in 2001, suddenly ground to a halt, then dropped from £24.8 million to £24.4 million. In its accounts the company blamed "depressed trading conditions following the September 11 terrorist attacks" for the sales fall.

Any recovery last year will have been hampered by the job losses in the City - which wiped tens of millions of pounds from the disposable income of London's wealthiest shoppers - and the Iraq war.

The London stores have also suffered from criticism in some quarters that they are unwelcoming and antiseptic. One commentator once said going to the Bond Street flagship branch was about "as much fun as an hour in a bank".

Despite its high profile in London, setting up the UK operation has been hugely costly for the parent company, Prada Holding, which has financial problems of its own. Since it started trading in 1997, the total losses of Prada Retail UK hav e totalled more than £13million and it has struggled to break into the black.

But the label - with its distinctive-triangular logo - remains one of the world's most influential and is said to have been the inspiration for a host of high-street collections, including this year's Marks & Spencer summer range.

One fashion expert said: "It is still a cool label that makes grown-up clothes all the topbrass A-list people love. It is one of those rare labels that has total respect as much from 50-year-old women as 18-year-old women."

The global Prada empire is controlled by the Prada family, headed by Miuccia Prada, and her husband, chief executive Patrizio Bertelli. It is said to be heavily in debt and has twice been forced to postpone plans for a stock-market flotation. No one at the company was available to comment.