The Patsy and Eddy generation, it would seem, have tightened their Gucci belts in the recession.

So today the Absolutely Fabulous fashionistas' one-time favourite haunt Harvey Nichols revealed it is to target the under-thirties in a bid to regain a slightly more fabulous bottom line.

The department store saw profits plunge by 40 per cent in the last financial year as the banking collapse wiped out the wealth of many of its traditional customers.

Chief executive Joseph Wan said spending by the young, who have been less exposed to plummeting stock markets and house prices and are less inclined to save, is holding up during the recession and admitted rival stores who focused on that age group were seeing better sales. He said the company had to adapt: "Even in downturns we need to see ways to get market share."

A major redesign of the Knightsbridge flagship store is to begin in August to make more space for edgier brands.

The fourth floor, which currently sells gifts, will be given over to clothing ranges aimed at twenty-somethings and relaunched next spring. New, as yet unnamed lines and independent labels will be brought in and stock of current favourites expanded, including 3.1 Phillip Lim, Alexander Wang, Vanessa Bruno, Marc By Marc Jacobs, Antipodium and Luella.

The revamp will make more room on the third floor for teenage ranges, which Julia Bowe, Harvey Nichols's marketing communications director, said were particularly "recession proof".

Young trendsetters including Alexa Chung and Peaches and Pixie Geldof are sometimes spotted at Harvey Nichols but managers hope the updated stock will put the store firmly on their generation's shopping radar.

Ms Bowe added: "The new offering will appeal to customers who are themselves fashion leaders and wish to look beyond the traditional international designer brands. We'll still do the well-established brands on the first floor but we realised that market's pretty saturated.

"A year ago when we signed off the fourth-floor redesign we saw that younger generations would drive our fashion sales. That is becoming an even bigger trend during the recession."

In contrast to Harvey Nichols, which saw profits fall from £18 million to £10 million in the last financial year, Selfridges, which has long been known for its forward-thinking fashion, recorded very strong trade. It saw profits leap 30 per cent to £84.1 million, with total sales up 10 per cent to £655 million.

Teenage fashion mecca Topshop posted record sales and profits last year and the popularity of online fashion website Asos, which copies celebrity looks, exploded.

Asos saw sales double to £165 million in the year to the end of March, prompting analysts to up their profit expectations to £13.7 million, almost double the previous year.

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