Shoe problems hit Sears profits

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The Independent Online
NIGEL COPE

Stock problems at Olympus Sports and British Shoe - which takes in Dolcis and Saxone - have forced the Sears retail group to warn on profits just two months after it issued a buoyant set of full-year results.

Shares in Sears, whose other interests include Selfridges and the Freemans catalogue, fell 3p to 97.5p after the company said profits in the first six months would be lower than last year.

Other retail stocks, including the mail order group Great Universal Stores, also fell as some analysts re-appraised their profit forecasts and pointed to a wider mailaise on the high street.

Hilary Monk of the retail consultants Verdict Research said: "It's not just Sears that is having problems. Most are now pinning their hopes on the second half of the year, though much will depend on what happens in the Budget in November."

She said a gap was developing between the strong retailers - which could afford to invest in upgrading stores and distribution systems - and the weak, which could not. There was also a gap developing between successful and poor locations: some high streets were struggling while out-of-town shopping centres were packed.

At the annual meeting in London yesterday, Sears' chief executive, Liam Strong, blamed unseasonal weather, weak consumer demand, tough competition and stock problems for the profits warning and added that trading had been particularly difficult in the past two months.

Ms Monk said the June sunshine had come too late for fashion retailers, many of whom would now be forced to sell at knock-down prices.

Sears' announcement follows a similarly downbeat statement from Allders - which has reported slow sales at its department stores - and House of Fraser, which is struggling against weak demand and stock problems at stores such as DH Evans and Dickins & Jones.

Sears said yesterday that like-for-like sales had increased by 2.6 per cent in the past year, which was significantly lower than expected. The company had been forced to cut prices to clear old stock at British Shoe shops and Olympus Sports; shop closures will accelerate. Trading has also been poor at Miss Selfridge, where skimpy skirts and tops proved unpopular.

Selfridges is performing strongly, helped by the early stages of a pounds 55m refurbishment. Trading at Freemans is tough, though the company says it has maintained market share. Wallis and Richards are also performing strongly.

Sales have been strong at Shoe Express, the out-of-town Shoe City stores and Hush Puppies, but this has been offset by weak trading at the older divisions - such as Saxone and Freeman Hardy and Willis - which are being sold or closed.

Adams childrenswear stores are improving and a further 40 stores will be added in the second half.

Investment Column, Page 22

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