GUS plan to end catalogue of woes as profits fall 2%

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The Independent Online
Great Universal Stores, the catalogue retailer, plans an assault on the direct mail order market in an attempt to reverse the flagging fortunes of its home shopping division.

Lord Wolfson of Sunningdale, chairman, also plans to offer GUS customers personal loans and insurance products in a push to increase the size of its financial services division.

"We are looking at new financial services products. We could give loans of pounds 3,000 to buy a car for example. Insurance, mortgages and PEPs are also a possibility," Lord Wolfson said yesterday.

GUS is launching four new catalogues this autumn which will be distributed directly to customers' homes. The titles include a Disney catalogue selling characterised merchandise and another selling GUS's own Thomas Burberry clothing line.

A new sporty clothing range and a catalogue for the more mature customer will also be sent out.

The move is designed to capture a chunk of the direct mail market from competitors such as Next and N Brown. The direct mail market has been growing much faster than GUS's traditional mail order business, which sells catalogue items through a network of agents.

The news came as GUS announced its first fall in annual profits for almost 50 years. Pre-tax profits fell 2 per cent to pounds 571m.

The main culprit was the home shopping division which had a disastrous year, with profits falling 17 per cent to pounds 124m.

Lord Wolfson likened GUS's core mail order business to a supertanker that had gone off course.

"We spent too much money on reducing costs rather than improving service. We are hopeful we can turn this large supertanker around but that will not happen overnight," he said yesterday.

GUS disappointed analysts by not paying a special dividend.

Lord Wolfson appeared to rule out a special dividend payment for the forseeable future.

"If, in two years' time, we haven't used the cash then we would look for some way to return cash to shareholders," he said.

Investment column, page 25