The Scottish company supplies designers such as Prada, Gucci, Burberry and Clements Ribeiro.

However, it said tough market conditions in the luxury goods sector had hit the knitwear business.

Pre-tax losses increased from £2.3m last year to £6.1m at the end of June, while turnover fell from £37.5m to £24m.

Minimal recovery in cashmere raw material prices was not enough to restore confidence in the fibres and yarns markets

Ian Irvine Chairman

Last year the group recorded operating profits of £200,000, but this year it posted losses of £4.9m for the six-month period.

Shares in the group fell by 13% to 27p in morning trading after the update.

Dawson, which also sells its own range of knitwear under the Ballantyne Cashmere brand, is based in Kinross, Tayside.

It procures raw cashmere fibre from goat herds in Inner Mongolia and spins the yarn in Scotland.

The yarn is spun in Scotland

Chairman Ian Irvine said: "The financial results for the first six months reflect the very tough market conditions impacting the global luxury goods sector, which have significantly affected performance in the knitwear business.

"In addition, minimal recovery in cashmere raw material prices was not enough to restore confidence in the fibres and yarns markets."

Dawson said many aspects of its businesses were still feeling an impact from the global economic downturn.

"Sustained volume growth will only be achieved through recovery in the luxury goods sector, which we do not anticipate will occur in this financial year," said the company.

The group has brought in a new Italian design and marketing team for its Ballantyne brand, which will unveil a new collection next year.