Storehouse back in favour after chain disposals: Shares rise as group returns to the black

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The Independent Online
SHARES in Storehouse, the BhS and Mothercare retail chain, rose 17p to 200p yesterday as the group bounced from a pounds 27.3m loss to an pounds 11.6m pre-tax profit in the 28 weeks to 9 October.

The recovery was largely due to the disposal of the Richards and Habitat chains, which contributed pounds 37.8m of operating losses and losses on disposal in the previous period, but operating profits from the remaining businesses were 45 per cent ahead at pounds 17.1m.

The improvement was most pronounced at BhS, where profits increased from pounds 10.5m to pounds 15.4m on sales 4.3 per cent ahead at pounds 337.2m. Part of the improvement was because of a pounds 3m fall in rent after the unwinding of a property venture.

'We have changed the nature of BhS,' said Steve Bedford, a Storehouse director, 'and the customers who know us are responding'. But he admitted that the group still needed to attract more customers by improving its brand image.

It has been refurbishing stores - about 60 per cent should be completed within the next 12 months - and these are performing better than old-style shops. It is also working on buying systems to improve stock availability.

Sales at Mothercare, where reorganisation is less advanced, rose 6 per cent to pounds 141m, despite price cuts, while profits were pounds 400,000 higher at pounds 2.1m. Ann Iverson, Mothercare director, said she was pleased with the results. Nine new concept stores, featuring novelties such as talking trees, have been opened and sales are ahead of expectations. The remainder will be completed over the next three years at a cost of pounds 25m.

She added that the group has gained 1 percentage point of market share in children's clothing, while push-chairs and cots have also enjoyed gains. The gross margin fell slightly 'but that was because we were over-priced. We are addressing that'. The interim dividend was held at 2.5p, on earnings per share of 1.4p (6.9p loss) or 3p before exceptional items. Keith Edelman, chief executive, gave a clear hint that the final dividend, 2.5p last time, will be increased. He said BhS sales in the second half were showing similar increases to the first half, while Mothercare's were on an improving trend.

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