Prada in the red as UK sales tumble

PRADA, the catwalk label favoured by stars such as Madonna and Elizabeth Hurley, has fallen into the red. It was revealed today that the Italian fashion house, famous for its iconic and prohibitively expensive handbags, made a loss of nearly £1m in Britain in 2003, the latest year for which accounts are available.

Prada also suffered falling sales for the second year running despite critical acclaim for its latest collections. Turnover for the year slipped from £24.4m to £23.5m.

Luxury goods experts said the firm, which has its UK flagship store in London's Old Bond Street, was still struggling to recover from the downturn triggered by collapsing stock markets, the 11 September attacks and the Sars outbreak.

Catherine Macdonald-Keir, deputy editor of Luxury Briefing journal, said: 'We had fewer tourists coming to London and a huge part of Prada's sales in this country are to visitors. There was also a move away from the big fashion brand names towards smaller niche players.'

Prada, with its recognisable triangular label, has been trading in Britain since 1997 and has grown rapidly, but has struggled to make a consistent profit. At the end of 2003 accumulated losses stood at just over £13m.

{1} Last year the company poured more money into its British offshoot, completing an expensive refurbishment of its London store based on the design of its Via Sant Andrea store in Milan.

In its annual report the company blamed the latest slump on accounting transactions 'of a one-off nature' and said 'improvements are anticipated in future'.

Sales were said to be up by 14% in the first eight months of last year, which saw a strong recovery in the global luxury goods industry.

The UK downturn comes as Prada, once seen as one of the most exclusive labels, joins the roll-call of 'chav-chic' brands along with Burberry and Pringle. Prada clothes and accessories are now favoured by designer-label obsessed teenagers across Britain.

Prada, owned and controlled by legendary chief designer Miuccia Prada and her husband Patrizio Bertelli, is preparing again for a long delayed stock market flotation.

The company, also owner of the Miu Miu and Jil Sander brands, has been reducing its once huge debt mountain in advance of an expected third attempt to float, possibly this year.