Problems Storehouse can't shelve
The Investment Column
Friday 24 May 1996
It has built margins rather than chasing sales, kept the lid on costs and sorted out the nuts and bolts of the business, including reducing the number of suppliers and shortening lead times. Distribution costs have also been addressed and will fall by a further pounds 3m this year.
It is a similar strategy to that employed by John Hoerner at Burton which has also seen its fortunes improve. Storehouse shares have responded to the treatment, rising from around 200p at the time of Mr Edelman's appointment to yesterday's 327p. The 21 per cent hike in profits to pounds 110m shows that the fruits of his work are coming through.
But the City is already looking to the next stage. With margins re-built and store refurbishment progressing, management must now drive sales which have been flat for more than five years.
Like-for-like sales fell 2 per cent across the group last year, with sales in the main BhS and Mothercare chains down. Mothercare had a particularly weak second half on the back of a weak clothing range and problems with product availability. Even these uninspiring figures are flattered by another stellar performance from Storehouse's overseas stores. Even including new openings, the group's UK sales fell by more than 2-3 per cent last year.
Though management is saying that boosting sales is the priority, this will be no easy thing as advertising expenditure will be cut this year after the high spends of recent years. The company hopes store refurbishments and the gradual maturing of new openings will be enough to kick-start sales.
There is also much to do at Children's World, the out-of-town group acquired from Boots earlier this year for pounds 62.5m. Next year's accounts will include exceptional charges of pounds 16m-pounds 18m to cover the integration programme which will include the closure of the Nottingham head office in September and possibly the closure of some stores.
The store names will not automatically change to Mothercare, even though the company perceives it to be a stronger brand. Mothercare World is a possibility, though the re-branding will not start until next spring.
The overseas stores are going great guns, with franchise sales having increased by 29 per cent to pounds 78m.
BZW is forecasting profits of pounds 125m this year, which puts the shares on a forward rating of 16. They are no more than a hold and there is probably better value elsewhere.
- 1 Is Gideon Levy the most hated man in Israel or just the most heroic?
- 2 Students offered grants if they tweet pro-Israeli propaganda
- 3 Satellite full of sexually experimental geckos adrift in space, Russia loses control of mission
MH17 crash: Investigators discover more human remains and 'huge section of plane'
Susan Sarandon on David Bowie romance: 'He's worth idolising'
Students offered grants if they tweet pro-Israeli propaganda
A day in the life of Vladimir Putin: The dictator in his labyrinth
Exclusive: Cameron’s Big Society in tatters as charity watchdog launches investigation into claims of Government funding misuse
The 'scroungers’ fight back: The welfare claimants battling to alter stereotypes
Arizona execution lasts two hours as killer Joseph Wood left 'snorting and gasping' for air
Malaysia Airlines MH17 crash: Ukrainian military jet was flying close to passenger plane before it was shot down, says Russian officer
Malaysia Airlines MH17 crash: Massive rise in sale of British arms to Russia
Malaysia Airlines MH17 crash: victims’ bodies bundled in black bags and loaded onto trains
John Barrowman praised for Commonwealth Games opening ceremony gay kiss
iJobs Money & Business
£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...
£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...
£280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...
£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...