Bottom Line: A tale of two Sears

SINCE Liam Strong arrived as chief executive of Sears, the retail giant has lifted profits from pounds 81m to pounds 84m, slashed the debt from pounds 153m to pounds 47m, worked a miracle in the disastrous shoe shops chains, started to sweat the assets of the women's wear division, and wisely got rid of poorly performing businesses.

Since Liam Strong arrived as chief executive of Sears, it has plunged from a pounds 23m profit to a pounds 48m loss, slashed the dividend from 5.355p to 3.5p, stubbed its toes on Europe, run into problems in its Olympus sports chain and been forced to pay people to take assets off its hands.

There is a touch of the curate's egg about Mr Strong, who joined from British Airways in February 1992. The inconsistency on profits depends on whether you look at the Sears accounts prepared the traditional way or under the new FRS3 rules. The patchiness depends on which parts of the sprawling business you look at.

British Shoe Corporation's profits advance from pounds 9.3m to pounds 23.3m in the year to 31 January is encouraging. And there is pounds 30m of unused provisions available to shut down some of the worst stores.

One worry, however, is that the push towards sourcing from dollar- denominated Far Eastern countries will backfire in the wake of sterling's decline.

The women's wear shops are doing well and Richards, the loss-making chain bought from Storehouse, is on target to make profits by the second half of the year. The contribution from Selfridges rose from pounds 16.2m to a creditable pounds 16.9m. Profits from Adams, the children's wear chain, are up but slowing.

Sears usually has a skeleton to disclose. This year it was ter Meulen Post, a loss-making Dutch mail order business acquired a month before Mr Strong arrived. It is proving to be a pig - losing pounds 6.9m last year mainly because of problems with the merchandise mix.

Also on the Continent the joint venture with Groupe Andre ran into the German slowdown: its contribution fell from pounds 6.2m to pounds 3.4m.

Fresh valuation of properties wiped 10 per cent from the portfolio, now valued at pounds 650m. While the high-street properties have lost 23 per cent of their value since they were last valued, other properties have appreciated - the Selfridges freehold from pounds 165m to pounds 180m. Gearing is down to just 4 per cent.

The shares fell 3p to 104p after a rather downbeat presentation. Forecast profits of pounds 121.5m and earnings of 5.4p in the current year put the company on a price/earnings multiple of 19 - a 10 per cent premium to the sector.

Despite the recent removal of the overhanging House of Fraser stake this rating seems quite high enough.