High street retailer Littlewoods today announced a fall in operating profits and plans to shake-up its chain of Index catalogue shops in order to cut costs.
The group will move 35 of the Index stand-alone shops to inside its existing Littlewoods stores, while a further five will close altogether – leading to 87 job losses. Littlewoods’ plans came as it turned in an operating loss of £19.1m for the half year to 31 October, compared to a profit of £36.5m for the same period last time.
The retailer has been hit by tough competition on the high street and in response has slashed prices, which has consequently hurt margins. The shake-up of the Index chain will see it generate cost savings of £10m.
It is also aiming to cut costs of £12m at its head office, and in September said it would axe 200 jobs from the Liverpool base, which employs 800 staff. The group has also warned more restructuring is planned for the second half year.
However, although profits at the operating level fell, bottom-line figures for the half-year actually came in way ahead of last time – inflated by a £155m profit on sale of its football pools business. The pre-tax profit was £144.7m, against £27m last time.
Turnover during the half year dropped slightly, to £939.3m against £992.3m. Littlewoods, which is a privately owned company, is also hoping to boost trading with a planned £130m investment programme over the next 18 months, with the major project being the refurbishment of 70 of its 113 stores.
It is also buying six C&A stores – the shops were put up for sale after C&A said it was pulling out of the UK market earlier this year. Following the shake-up of the Index stores, Littlewoods with have 58 stand-alone Index shops remaining.
The five Index shops to be closed are in Gloucester, Kingston-upon-Thames, Orpington, Uxbridge and Welwyn Garden City.
The first 15 shops of the 35 to be moved inside Littlewoods stores are in Ashford, Bedford, Birkenhead, Carmarthen, Cheltenham, Dundee, Dunfermline, Eastbourne, Eastleigh, Harrogate, Hastings, Lincoln, Manchester, Preston and Swansea.
EGi News 12/12/00
