Harvey Nicks' profits dive

The upmarket department store Harvey Nichols has revealed it expects profits to slump by 40 per cent this financial year, as the credit crunch hits its well-heeled customers.

Joseph Wan, the chief executive, said that Harvey Nichols had suffered a "sudden" and "significant" drop in sales following the collapse of Lehman Brothers and the banking crisis. He told Retail Week, the trade magazine, that sales were in "freefall" from October but had stabilised after the winter sales.

For the 12 months to 31 March, the retailer forecasts that bottom-line profits will be down by 40 per cent to £10m. Group sales are likely to fall by around 5 per cent.

Mr Wan said: "A lot of wealth has evaporated and cannot be replaced overnight." He added: "The total consumption pool has shrunk since last year."

The retailer's UK stores include London, Leeds and Birmingham, while overseas it has a presence in the Republic of Ireland, Riyadh, Hong Kong, Dubai, Istanbul and Jakarta.