Clothing retailer Austin Reed today said half-year profits had fallen 59% to £1.1m in the face of a shake-up and the impact of Sars and the Iraq war.
The Thirsk, North Yorkshire-based group blamed disruption from the revamp of the group’s flagship Regent Street store, as well as a wider reorganisation, for the fall in underlying profits in the six months to 9 August.
Austin Reed added that Sars, Iraq and the congestion charge in London had contributed to “a difficult trading environment”.
But the group said some of the benefits of its reorganisation would emerge in the second half of this year, with the full impact coming in 2004.
Like-for-like sales in the first eight weeks of the second half were down 6% after Austin Reed carried out changes to its product ranges.
Group chief executive Roger Jennings said: “These changes give a strong foundation for growth.”
The group has been the focus of takeover speculation this year after several approaches, including one from the grandson of the company’s founder, Nigel Robertson.
But it ended this summer after the group declined the approaches in May and Robertson pulled out in June.
The speculation came amid an ongoing battle by the Country Casuals owner to turn around faltering sales, reflected in an 8.5% year-on-year drop in total sales in the nine weeks since January.
The group operates 47 Austin Reed stores and 39 concessions in the UK, as well as 64 Country Casuals stores and 141 concessions.
Today, Austin Reed said the revamped Regent Street store had seen its sales rise by 17% since September’s relaunch.
Group turnover was £56.4m against £60.3m last time, which the group said partly reflected the redevelopment of the Regent Street store.
The cost reduction programme launched in March resulted in a 19% reduction in the group’s total headcount to 1,700 and delivered planned cost savings of £300,000 in the first half.
A property sale boosted bottom line pre-tax profits to £3.5m against £2.7m last time.
References: EGi News 09/10/03
