Tie Rack upbeat on profits

TIE RACK, the ties and scarves retailer, issued a profits warning with a difference yesterday, writes Patrick Hosking. It said earnings for the year to 31 January would be higher than market expectations.

The shares rose 11p to 83p as the company's broker, Barclays de Zoete Wedd, raised its forecast for pre-tax profits from pounds 3.5m to pounds 4.5m. Most forecasts had been in the pounds 2.5m-pounds 3.5m range.

Tie Rack said it had a 'satisfactory' Christmas. Like-for-like sales grew 2.5 per cent and have risen 6 per cent in the first 11 months of the financial year.

The better than expected performance contrasts with other retailers like Body Shop International, Alexon and Laura Ashley, which have been forced to damp down City hopes this week.

Tie Rack said cash flow had been strong and the net cash balance was above pounds 7.5m. The group has opened a net 16 shops, bringing the total to 273. Sales growth has slowed sharply since the first half, however, when like-for-like sales were 11 per cent ahead, thanks in part to easy comparatives in the previous year, when the Gulf war depressed demand.

Tie Rack, which came close to collapse in 1991 because of over- expansion, has recovered strongly in the past 12 months, following the pounds 3.2m rescue rights issue.