Prada expected to abandon its £4bn Milan flotation

Speculation mounted yesterday that Prada, the ultra-hip Italian fashion house, may abandon its long-awaited £4bn flotation on the Milan stock exchange in response to last week's terror attacks in the US.

Prada, which owns the Jil Sander, Helmut Lang and Mui Mui labels, as well as Church's shoes, had been expected to confirm last week whether it would seek a listing this autumn. But sources hinted that heightened concern about a global recession had prompted the group to delay the float, if not to drop it altogether.

Prada has already postponed its float once this year. The group had been scheduled to seek a listing in summer, but falling stock markets and a slowing economy caused Patrizio Bertelli, the chief executive, to postpone the flotation. This was in spite of the successful flotation in June of the Spanish retailer Inditex, owner of the Zara fashion brand.

The Italian fashion house, renowned for its acquisitive nature, had aimed to list between 25 and 30 per cent of its shares. That would have raised around £1bn, valuing the Milan-based group at up to £4bn. Analysts have warned that luxury goods sales are likely to be plummet as a result of last week's attacks. Whether or not the US economy slides into a recession will depend on the extent to which US consumers continue spending.

LVMH, the world's biggest luxury goods group, last week reined in its full-year operating profits forecast from double-digit figures to between 5 and 10 per cent growth. Brands such as Prada and Gucci, which are at the more affordable end of the designer goods scale, are particularly vulnerable to a downturn. However, Mr Bertelli had insisted that trading at his group remains healthy.

Meanwhile, Great Universal Stores, which owns the highly coveted Burberry brand, had said it will float the label by next June.