Royal tailor must tighten its belt after top staff leave

Gieves & Hawkes, suppliers of uniforms to princes and pop stars, hits trouble

It created Prince William's military uniform for his wedding day, designs suits for David Beckham, David Cameron, Stephen Fry and Jenson Button, and holds royal warrants from the Queen, Prince Philip and Prince Charles. But behind the pomp of the prestigious No 1, Savile Row address, there is a crisis of fortune at Gieves & Hawkes.

Despite the fine cut of its cloth, the tailor, which has created military uniforms for everyone from Lord Nelson – who died wearing their creation – to Michael Jackson, appears stubbornly stuck in the red. In the latest blow, the company yesterday confirmed its chief executive, John Durnin, has suddenly stepped down from his role, throwing the company into turmoil, just months after a leading pattern-cutter left the business.

Mr Durnin, 53, the former chief executive of the luxury menswear brand Alfred Dunhill, was parachuted into the loss-making business almost two years ago to restore its fortunes. The flagship store was redesigned to be a "men's emporium", with bespoke shoes and a hair salon offering grooming products. Ready-to-wear lines were redesigned and unprofitable stores closed. But this was not enough to prop up the beleaguered brand, which sells blazers from £900 to £2,500, and commands a price of £3,500 upwards for a bespoke suit, but which made a loss of £2.4m in 2010.

The Savile Row rumour mill has already gone into overdrive, with suggestions that the Hong Kong trading giant Li & Fung, which supplies products to Marks & Spencer, may be considering a takeover. The brand is currently owned by the Hong Kong-based USI Holdings, but Li & Fung already owns the licence to G&H in China, and acquired Hardy Amies, another royal outfitter, in 2008.

Experts are at a loss to suggest how the brand could return to the black. Eric Musgrave, a menswear writer and former editorial director of Drapers, said: "It is inappropriate that as a classic menswear business it has been chasing a young, fashionable consumer... It seems unclear how they will turn the business around."