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The move follows a company review, which focused on declining revenues, a large rent increase – doubled to £1.2m in June last year – and the prospects for Meta, their contemporary design business.

The resulting message was clear: the company’s long-term prospects were “now overshadowed by short-term requirements to withstand economic recession”.

Announcing a significant drop in sales since October – they anticipate second half sales to be 40 per cent down on the same period for 2007 – and forecasting a continuing downturn for 2009 and beyond, new chief executive Giles Hutchinson Smith said that the focus had to be reducing costs and preserving cash.

Mr Hutchinson Smith, formerly executive director of Meta, is joined by Henry Neville, already in charge of the New York operation and now group sales and marketing director.

He would not be drawn on Mr Synge’s departure, but told ATG: “Mallet has a new vision and a new strategy. We were held to ransom by the rents paid by the fashion houses in Bond Street and the market has changed.”

The board also want to concentrate on raising brand awareness via marketing and PR campaigns.

The silver lining appears to be Meta, which has not only helped to raise Mallett’s profile internationally, but has brought the business a new generation of rich clients. Sales are doing well and it is still on target to break even within three years, with prudent cost control.

Hatfields, the restoration business, remains a valued asset, but its overdependence on declining business from Mallett means that it is now looking for work from other sources as well.

Mallett have already announced their intention of selling their Bond Street lease and moving to Mayfair, and they have also secured an increased credit facility, up to £3.5m from £1m, from their bank.

“We are going to smaller premises and people are having to work on a lower cost base, but we will maintain Mallet’s values and clients will always get the same attention,” said Mr Hutchinson Scott. “We continue with fairs but will look at the market carefully and stick with the most effective fairs. We want new clients.”

Their staff restructure will be accompanied by ongoing reviews of their interests in New York, Hatfields and James Harvey British Art, the London fine art dealership.