Alexon hints at further unpleasant revelations

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The Independent Online
ALEXON, the troubled clothing retailer, hinted darkly yesterday that things may be even worse than the former managers, who were ousted last month in a boardroom coup, said when they reported a pounds 1m loss in March, writes Patrick Hosking.

John Osborn, the new chief executive, issued a statement saying the company was looking at the assumptions on which year-end stock had been valued. He was also re- appraising the business plan and the medium-term financing needs.

The announcement came after the stock market closed. John Richards, an analyst with NatWest Securities, said the shares could be hit on Monday. 'The indications they gave to the market are probably going to change, and change for the worse,' he said.

Institutional investors last month forced the resignation of the top three executives as the price for further support. A rights issue is expected shortly to reduce the pounds 21m of borrowings.

Alexon has been plagued by the unexpected build-up of stock, particularly in its Dash chain. Booming demand for its leisurewear dried up when the recession started to bite. But Alexon chose not to discount, preferring 'to protect the brand name'.

In March the group, which also runs Eastex and Alexon shops, reported a plunge to an annual loss of pounds 986,000 from pre-tax profits the previous year of pounds 11.3m. It then had stock levels of pounds 45m, against annual turnover of pounds 110m.

David Cohen, finance director and the only executive to survive the boardroom purge, commented: 'It's a very carefully worded statement. It's intended to say that and no more.' He declined to amplify.