Deputy City Editor
A boardroom coup at Dawson International, the Pringle sweaters business, has led to the resignations of its chairman and managing director. They are carrying the can for a string of bad news, culminating yesterday in the announcement of 500 job losses in Scotland and the closure of two factories.
The market, which has been looking for scapegoats for Dawson's poor performance, pushed the shares 4.5p higher to 104p. Over the past three years they have underperformed the market by almost two-thirds.
In a move thought to have been precipitated by disgruntled institutional investors, including PDFM, Royal Insurance, M&G and Schroders, Sir Ronald Miller, chairman, has been replaced by non-executive Derek Finlay, and Nick Kuenssberg, managing director for less than a year, is succeeded by Peter Forrest, a divisional head.
Investors are annoyed that they stumped up £45m in a one-for-four rights issue last May to restore Dawson's badly mauled balance sheet. The shares are currently well below the 120p issue price.
At the time, Sir Ronald told investors that having taken the decision to implement essential rationalisation in the US, the group was in a strong position to achieve growth again.
Mr Kuenssberg also said last year that the clear-up of the US damage was complete.
Sir Ronald, who joined Dawson in 1968, had been chairman for the past 12 years. He and Mr Kuenssberg are expected to receive pay-offs relative to their respective £200,000 and £135,000 salaries. The company is looking for a new chief executive.
Dawson also announced the proposed sale of its US shower curtain business, Dawson Home Fashions, which it had unsuccessfully tried to dispose of a year ago. The company warned that its eventual sale will lead to a further write-down on its $50m net asset value.
The write-off will be in addition to a £10m charge to cover the closures and job losses announced yesterday. Those are divided between the Pringle operation, where a factory at Arbroath is to be closed, and at Blackwood Brothers, Dawson's yarn spinning company, which is suffering from reduced demand for high quality carpets.
Pringle is reeling under lower sales and higher raw material prices and will make a loss this year. Its retail operations are also to be run down.
Dawson said it would make profits of at least £23m in the year to March. That compares with a £94.5m loss announced a year ago after exceptional write-offs in the US. It is to pay a dividend of at least 1.5p, giving an unchanged full year total of 3p.