Sears offers pounds 84m to soothe shareholders

SEARS, the ailing retailer, yesterday sought to appease its long- suffering shareholders with a pounds 84m cash payment, as it unveiled a disappointing set of interim results that prompted a wave of analysts' downgrades.

Sir Bob Reid, the company's chairman, confirmed the scrapping of the flotation of Freemans, its troubled mail-order business, due to difficult market conditions and poor trading performance.

The owner of the Miss Selfridge womanswear shops and Adam's children clothes chain also announced the sale of a large portion of its property portfolio, valued at pounds 134m, and the intention to raise cash from its loyalty card business.

Sir Bob said that shareholders, who have seen Sears' share price plummet since the July demerger of the Selfridges department store, will receive pounds 84m in cash at the beginning of April. The return of capital will be worth 55p a share and is likely to take the form of a share buyback or an exceptional dividend.

Sir Bob denied that he had been under fire from shareholders for the company's poor performance and said that the handout was above the pounds 77m expected by the market.

His comments came as Sears returned to the black, posting a pounds 8.5m profit before tax in the first six months of the year, compared with a pounds 98.3m loss last year. However, the figures were flattered by the disappearance of a pounds 93.4m exceptional charge related to the disposal of its footwear business.

The trading profit of pounds 4.3m was below last year's pounds 10.7m, dragged down by a pounds 2.5m loss at Freemans, whose pounds 360m sale to Littlewoods was blocked by the competition authorities last year. The company said that Freemans' plight has continued in the second half with like-for-like sales down by 4 per cent over a year ago.

The comments prompted City analysts to slash their forecast for the full year. Several brokers lopped up to a third from their predictions and are now expecting a profit of around pounds 35-40m.

However, the shares shrugged off the revisions and rose 6 per cent to 163p. Sir Bob said that in the light of Freemans' "disappointing" showing and the difficult stockmarket conditions, Sears had decided to shelve the float planned for the end of the year.

The troubles at Freemans overshadowed the rest of the retailing division, which posted a 1.8 per cent increase in sales and a pounds 4.7m rise in profits to pounds 2m.