Fortnum's hampers put damper on profits as gourmet customers lose their appetite for champagne and caviar

The bottom has fallen out of the hamper market, if figures released yesterday by Fortnum & Mason are any guide.

The bottom has fallen out of the hamper market, if figures released yesterday by Fortnum & Mason are any guide.

The select London food store, which has supplied the Queen's Christmas puddings, confirmed that profits from its British operation had slumped to less than a tenth of the £1m it made in the previous year.

Reduced earnings of £80,000, excluding interest payments, helped to drive down the company's worldwide pre-tax profits from £2.25m to £1.03m in the year to last July. A slump in corporate Christmas hamper sales and a fall in overseas visitors were largely to blame.

Executives at Fortnum's, established 300 years ago by a royal footman selling second-hand candles, were tight-lipped on the profits drop. The company released a two-line statement insisting that its sales performance had improved. But accounts and a directors' report revealed that corporate orders for its goody baskets – which cost from £30 to £500 – had fallen substantially amid "difficult" trading conditions.

Jana Khayat, the company's chairwoman, said it had been hit by the economic effects of the 11 September attacks and the drop in tourism."[Our] business suffered reductions in the number of visitors to central London in the run-up to the key Christmas period and in the value of corporate hamper orders at Christmas," she said.

The company, taken into private ownership 18 months ago after 62 years with a stock market listing, had been criticised for its old-fashioned style and failure to concentrate on its lucrative food brand. But the store on Piccadilly is trying to spread its appeal, offering an internet mail order service. It announced last year that it was to start opening on Sundays and would introduce performance-related bonuses for its staff.

Among the 23 hampers available on its website – which shows a Fortnum's wicker basket on its home page – is the top-of-the-range Bloomsbury, containing 23 items ranging from a magnum of brut reserve champagne to a 2.5kg stilton.

The online operation helped to keep the store in the black with overseas sales bringing in profits of £712,000 – although this figure was down from £783,000 the year before. Total sales were down 2.5 per cent to just over £40m.

Whether the corporate hamper recession was symptomatic of a wider decline in demand for basketed goods was unclear. Park Group, one of the largest suppliers of Christmas hampers, reported a significant fall in sales in the mid-90s but insisted demand for the product was still strong. The British hamper market was valued at £200m last year, half that of 20 years ago.Marks & Spencer said its hamper sales were still buoyant.