Stores to close as Sears cuts payout

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The Independent Online
SEARS, the sprawling stores and mail order group, yesterday cut the dividend for the first time in its 39-year existence and announced plans to axe up to 2,100 jobs, writes Patrick Hosking.

The retailer aims to close 350 loss-making shoe shops over three years, shedding up to 1,800 jobs. Another 300 jobs are to be cut in its Freemans mail order business in the next six months.

Reporting a slump to bottom-line interim losses of pounds 90.7m after a raft of extraordinary and exceptional items, Sears said it was no longer prudent to maintain its unblemished dividend record.

It slashed the interim payout from 1.525p to 1p, and warned that the final dividend would also be cut by 35 per cent.

Geoffrey Maitland Smith, chairman, acknowledged that shareholders who had come to rely on the dividend would be disappointed. 'In view of the recession continuing, we have concluded that it is no longer prudent to maintain a dividend uncovered by after-tax profits from trading.'

Sears has held, or raised, every dividend since 1953, when the late Sir Charles Clore created the modern-day group with the purchase of J Sears Boot & Shoe (Truform) Ltd for pounds 4m.

The figures included a pounds 32.2m exceptional provision to cover closure costs at British Shoe Corporation. On a 'worst case' basis 1,800 jobs would go, but it hopes to limit the losses to 800.

The closures will be across all BSC's facias, including Freeman Hardy Willis, Curtess, Dolcis, Saxone and Manfield. The number of outlets will be trimmed to about 1,500, reducing sales space by 15 per cent. Some of the facias will be phased out.

Liam Strong, the chief executive who joined Sears last year from British Airways, said there was over-capacity in footwear retailing. He was confident BSC could be turned round: 'If you have 20 per cent of the market, you really should be able to get a sensible return.'

There was also an pounds 84m extraordinary loss on the disposal of the remaining menswear businesses, as foreshadowed last week when Sears announced the disposal of Fosters and Your Price to their management.

However, at the operating level the group made progress, lifting trading profits from pounds 23m to pounds 27.4m.

Selfridges, the London department store, raised profits 12 per cent to pounds 5.5m, despite sluggish sales of pounds 94.6m. The contribution from speciality retailing rose 16 per cent to pounds 6.5m, boosted by like-for-like sales growth from the Miss Selfridge and Wallis chains. Margins and like-for-like sales declined at Olympus sportswear.

Sales at Freemans have shrunk abruptly since April, reducing profits by 22 per cent to pounds 11.9m. The job cuts would yield savings of pounds 4m-pounds 5m a year, Mr Strong said.

Sears Andre, the 50/50 retailing joint venture with Groupe Andre of France, slumped from pounds 2.3m to pounds 400,000.

View from City Road, page 27

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