LUXURY knitwear company Pringle of Scotland has narrowed its losses by 35 per cent - but directors have warned there is little prospect of it moving into profit soon.

The business, which can trace its roots to 1815 and now has its flagship retail outlet in the Mayfair area of London, saw its turnover reduce from £5.9 million to £5.4m in the 53 weeks to February 1 this year.

The fall in turnover was said to be related to a re-organisation of the company's direct points of sale.

However, an improvement in gross margins, from 38 per cent to 53 per cent, led to the pre-tax loss coming in from £6.35m to £4.1m, according to accounts recently filed at Companies House.

The directors attributed the improvement in margins to a different sales mix in the year.

Pringle of Scotland, with its headquarters in Edinburgh but owned by the Hong Kong-based Fang family through its British Virgin Islands- registered company Pringle International Holdings, noted stock of more than £1.6m on its balance sheet, which was at a similar level to that of the prior year. Writing in the accounts the directors said: "The company continues to invest in the long term development of the Pringle brand and business on a global basis. All such costs are expensed and this continues to be the principal driver of the losses recorded in the current period.

"Pringle achieved a gross margin level of 53 per cent and continued to improve product offer, closely manage stock levels and strengthen the brand's position longer term."

Overall administrative expenses were at £6.95m, down from £8.49m.

Average monthly staff numbers reduced from 70 to 62 with employee costs falling from £2.83m to £2.25m. The net debt widened from £1.1m to £1.35m.

The directors said: "Investment in the Pringle of Scotland brand will continue. Direct retail development in both the UK and overseas is a key focus for the business in the short and medium term along with the development of alternative distribution channels such as ecommerce and selected licensing partnerships.

"At the same time emphasis on managing cost control has continued. The directors are not expected to report operating profits in the short term but are satisfied that the development of the brand and of the business are progressing in line with their long term strategic objectives."

Pringle of Scotland continued to receive support from its parent company with a £5m increase in share capital in the financial year.

The accounts also noted a further £4.1m which had been injected from Pringle Enterprises in the current ­trading year.

The company said: "Consequently the directors are satisfied with the financial position and future prospects of the company and with the ongoing financial support necessary for the company's continued strategic investment."