Alexon prolonged its summer sale through August in an attempt to shift stock, squeezing margins in the process. But it was still left with stock, which could mean a write-down of at least pounds 1m in the second half, according to Lawrence Snyder, its chairman.
Joan D'Olier, retail analyst with County NatWest, reduced her full-year profits forecast from pounds 10m to pounds 7.2m. 'There's a big problem on summer stock,' she said.
The company held the interim dividend at 3p despite a fall in pre-tax profits from pounds 2.7m to pounds 1.5m in the six months to 25 July. Its interest bill rose from pounds 557,000 to pounds 803,000 because of higher stock levels. Average debt rose to pounds 14m.
Sales fell by 7 per cent to pounds 48.7m, with demand in the South-east especially weak. Like-for-like sales in the main Alexon chain shrank by more than 10 per cent; at Dash, the leisurewear stores, they were 10 per cent down; but at Eastex, which caters for older women, they rose 10 per cent. Operating profits declined from pounds 4.4m to pounds 2.9m.
Mr Snyder said the autumn ranges had got off to a good start: 'During September all three ranges have had encouraging like-for-like growth.'
He was hopeful the final dividend could be maintained. 'We're still confident about long-term profits growth,' he said. Last year pre-tax profits fell to pounds 11.3m from pounds 12.8m for the previous 43 weeks, adjusting for the demerger from Claremont Garments.
The shares were marked down yesterday by 18p to 198p.Reuse content