Upmarket department store chain Harvey Nichols has seen its profits slump 40 per cent as the global financial hits its wealthy customers, it was reported today.

Chief executive Joseph Wan said sales had suffered a sudden drop following the banking crash and went into "freefall" from October, stabilising after the winter sales.

Harvey Nichols, which last September opened a store in Bristol's Cabot Circus, and also has UK stores in London, Leeds, Birmingham, Edinburgh, Dublin and Manchester, is now expected to make profits of £10 million in the year to March 31, down from £18 million the previous year.

"A lot of wealth has evaporated and cannot be replaced overnight," Mr Wan said.

"The total consumption pool has shrunk since last year. We must adapt."

He said group sales for the year were likely to have fallen around 5 per cent.

But Mr Wan expressed optimism that Harvey Nichols would be able to ride out the downturn.

"As long as we don't end up with a mountain of stock, survival should be no problem," he said.

Bristol financial analyst Mark Dampier of stockbrokers Hargreaves Lansdown said the figures were worrying.

He said: “A lot of us were surprised when Harvey Nichols opened in Bristol - can the city support it during a major recession?

“It was a key plank to get other high profile names to open in Cabot Circus but if anything happens to the store, it will clearly detract from going to Cabot Circus.

“I wonder if there are any high-net individuals in Bristol who can support the store at a time like this - spending £1,000 on a dress?”

The firm remains committed to store openings – including one in Kuwait – and discussions about a Nottingham branch are ongoing.

It is owned by the Hong Kong-based businessman  Dickson Poon, whose retail empire also extends into North America and Europe.