Monsoon thunders ahead of rivals with surging sales

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The Independent Online

Monsoon put its rivals to shame yesterday by unveiling the strongest post-Christmas trading figures of any high street retailer.

Monsoon put its rivals to shame yesterday by unveiling the strongest post-Christmas trading figures of any high street retailer.

The extent of the group's outperformance sent its shares up 11 per cent to 269.5p barely 12 months after its chairman, Peter Simon, tried to take it private with a 136.5p-per-share tender offer. The company revealed its like-for-like sales growth had accelerated during its first half, soaring 13 per cent during the six weeks to 8 January. Its interim underlying sales grew 10 per cent.

Mr Simon, whose family controls 75.5 per cent of the company he founded in 1972, said he was "pleased" with the rate of growth. He added: "We are not complacent as we recognise we are trading in difficult environments."

Only New Look, the privately owned, budget fashion retailer, and Peacocks, the value clothing chain, have come close to Monsoon's figures, with underlying sales growth of 11.6 per cent and 9.5 per cent. Marks & Spencer issued a profits warning and even Next, the darling of retail analysts, shaved its internal profits forecast after it was left with too much stock going into its sale.

Monsoon's sales growth comes in spite of it having one of the least corporate-governance friendly boardrooms in the country.

Mr Simon's decision to move the company to AIM, the junior market, in 2003 enraged those institutional investors who were forced to sell up because they were limited to holding shares in companies listed on the main stock market.

Many also felt that at 136.5p a share, excluding the dividend, Mr Simon's tender offer undervalued the company. As a result, his attempt in October 2003 to acquire more than 90 per cent failed, although he did manage to break the 75 per cent threshold. Since then, the company has axed the dividend, despite having a cash pile of £53.7m. "We look forward to investing our money on long-term projects at the appropriate time without any pressure to do so," Mr Simon said, alluding to the control he wields over the group.

Monsoon also ignored calls to comply with the Combined Code, which recommends that companies have a majority of non-executive directors on their boards. The only non-executive director on the board is Anton Simon, Peter's brother, who represents the Stoneycroft family trust. Yesterday Mr Simon was able to point to the company's soaring sales growth to support his assertion that it is better to concentrate on running a company than worry about wooing the City.

Richard Ratner, an analyst at Seymour Pierce and veteran critic of Mr Simon's boardroom practices, said: "Actually, on the results he has produced it is difficult to argue from a financial view point about this!" He added that the City had to "learn to live with" Mr Simon's views. Nick Bubb, at Evolution Beeson Gregory, said the near-doubling in Monsoon's share price "will be a reminder to investors not to let other companies go private too cheaply". He said Monsoon's figures showed "what specialist fashion retailers can do when they get it right". Numis Securities, the company's broker, raised its pre-tax profits forecasts to £54.8m from £49.6m.

Monsoon, which owns the Accessorize chain, reported a 32 per cent jump in interim pre-tax profits to £27.5m. Operating profits from its international division, which expanded into Turkey, Holland and Sweden during the half, doubled to £3m. Monsoon said it intends to "significantly" expand its Russian estate, which it bought back from its franchise partner in November.

Separately, a survey showed that London's retailers fared worse than their national counterparts. The British Retail Consortium said underlying sales in the capital in December shed 2.5 per cent. That compared with a 0.4 per cent decrease in like-for-like sales across the country.