Gloom deepens for textile firms

THE GLOOM in the UK textiles industry deepened yesterday, with Dawson International warning that profits for the second half of the year were likely to be significantly below market expectations and Sherwood announcing that four factories are in line for closure with the loss of 300 jobs as a result of a company reorganisation.

Both Dawson, the Kinross-based specialist textile and apparel producer, and Sherwood, the Nottingham-based lace-maker, blamed the slowdown in demand on Britain's high streets. But there were also international factors besides the strength of sterling.

Dawson said that unseasonally high temperatures in the US for the past two months had "severely impacted" thermal apparel sales. The combination of this setback with unprecedented product returns from leading discount retailers reported in the first half would result in the sales and profits for the full year being lower than last year, it added.

As a result, production levels and costs are being reduced in the coming 12 months, leading to an exceptional charge likely to amount to pounds 6.4m being taken in this year's accounts.

Although losses for the year to 2 January 1999 are likely to reach pounds 11m before exceptional items, the company is confident that the moves will strengthen its position. Peter Forrest, chief executive, said the group would be in a position to exploit any upturn in consumer trading.

Sherwood, which is the subject of a planned management buyout, said the reorganisation, expected to cost pounds 6.8m, was due to continuing worldwide weakness in the demand for lace, combined with poor trading conditions in Britain.

The announcement of this exceptional charge comes on top of the pounds 400,000 cost of closing the group's household lace operation announced in September.

With profits in the normally stronger second half of the year likely to be broadly similar to the first half's pounds 3.2m, the company is predicting a pre-tax loss once these exceptional charges are taken into account.