Jeweller-to-the-stars Theo Fennell said half-year sales slumped after the Olympics saw shoppers stay away from its West End stores.
The luxury jewellery retailer - whose customers have included Elton John, Victoria Beckham and Lady Gaga - said a fall in international customers during London 2012 left sales 8% lower at £4.9m in the six months to September 30.
The firm, which has a flagship store in Fulham, west London, an outlet in Mayfair and concessions in Harrods and Selfridges, said shopper footfall was badly impacted by the Games.
But Theo Fennell, which is in takeover talks with private equity firm EME Capital, said cost-cutting efforts drove losses down to their lowest level for four years, more than halving to £610,083 from £1.4m a year earlier.
The group said it must increase sales to return the company to profit and is planning a strategy review to develop the brand and its international network. It hopes to tap further into luxury markets across the Far East, Middle East and Eastern Europe.
Theo Fennell has failed to make a profit since 2007-08.