Theo Fennell sales fell 21%

Luxury jeweller Theo Fennell said sales fell 21% in December as the economic downturn hit demand for high-end gems and trinkets.

The company - popular with celebrities and known for its diamond-encrusted skulls and solid silver Marmite lids - blamed the "very depressed" consumer market in the UK for the like-for-like sales drop and warned it would make a loss for the year to the end of March.

The designer jeweller, which opened a concession in the Brown Thomas department store in Dublin last year, has two stand-alone London shops and concessions at locations in Newcastle, Manchester and Birmingham.

The company also revealed it would no longer run the luxury watch counters at the London department store Harrods, a decision it said was reached by both parties.

Theo Fennell said it would restructure and downsize as a result of current trading, adding there would be a "significant reduction" in overheads.

A spokeswoman could not give a figure for the number of jobs involved, but said the business was already streamlined and there would not be "many" posts cut.

The company said sales at its flagship and City stores were significantly down year on year while international sales were flat.

Sales from Theo Fennell's department store outlets which have a strong international customer base were in line with 2007 sales figures and in some cases ahead.

Theo Fennell, founded in 1982, has its flagship store in South Kensington, with items on offer including a £13,800 white and black diamond ring in the shape of a skull entwined by a snake.