The announcement sent its shares tumbling 14p to 56p, wiping 20 per cent off its market value and leaving it worth just pounds 17.1m.
The charges are mainly due to withdrawal from its import and distribution business to concentrate on What Everyone Wants, its discount chain. But they include compensation payments to former directors and further provisions against properties from the menswear division, sold last year, which have not yet been disposed of.
Two directors left during the year - Philip Green, chairman and chief executive, and Stacey Ellis, his successor, who left after a boardroom split over the choice of chief executive. Mr Green's compensation will be pounds 1.1m but Peter Carr, the present chairman, would not disclose Mr Ellis' pay-off. He has, however, taken one million share options at 28p, which will yield a pounds 280,000 profit even after yesterday's share price fall.
Mr Carr said What Everyone Wants was 'doing very well indeed'. But operating profits for the year to July would be below last year's pounds 10.1m because of a change in stock valuation costing up to pounds 500,000. The group said the final dividend would 'form a base from which to grow in future years'.
The final level of the dividend will depend partly on whether the import and distribution business is sold or closed.
The announcement surprised the City as David Thompson, the new chief executive, had assured analysts that there would be no further shocks. William Collum, retail analyst at Panmure Gordon, had been expecting pounds 9.6m profit before tax but now fears the group could fall into losses.Reuse content