Storehouse gains offset by disposal costs: Operating profits soar at BhS and Mothercare as sales show a 10% improvement

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The Independent Online
STOREHOUSE yesterday reported a surge in operating profits in each of its two main retail chains, BhS and Mothercare, but was hit by a burst of one-off disposal costs that led to a small decline in pre-tax profits.

Sales in each of the chains increased by 10 per cent. Operating profits at BhS grew from pounds 22.1m to pounds 44.1m. Mothercare transformed a prior year loss of pounds 3.9m into a pounds 5m profit.

However, after the pounds 31.4m exceptional cost of disposing of the Richards women's wear shops and Habitat furniture stores, pre-tax profits fell from pounds 15.8m to pounds 15.2m in the year to 27 March. Losses at Blazer, the menswear chain which is for sale, rose from pounds 500,000 to pounds 600,000.

Strong surges in clothing sales in BhS and Mothercare were partly offset by flat household goods. The group said it had overtaken Marks and Spencer to be the biggest school-wear retailer with 11 per cent of the market.

The tax charge grew from pounds 5m to pounds 14.8m, sending earnings per share plunging from 2.6p to 0.1p. However, the final dividend was held at 2.5p, making a total of 5p.

Graham Rider, finance director, defended the payment of a dollars 4m bonus to the former chief executive David Dworkin just weeks before his sudden departure. It was justified by the increase in operating profits of continuing businesses from pounds 17.7m to pounds 48.5m, he said. The search is continuing for a successor.

Mr Rider, who has not applied for the job, said there was little sign of any strong upturn in consumer confidence and warned that the 10 per cent like-for- like sales gains of the past year might not be sustainable.

Kimlan Cooke, an analyst with NatWest Securities, said the results were up to best expectations. She lifted her pre-tax profit forecasts for this year and next respectively from pounds 65m to pounds 70m and from pounds 79m to pounds 84m.

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