Vivat restructuring results in 76% profit leap

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The Independent Online
RESTRUCTURING at Vivat Holdings, the Lee Cooper jeans group, bore its first fruit in a 76 per cent increase in pre-tax profits to pounds 3.4m in 1993. But a warning about difficult trading conditions and a planned rise in spending on marketing took the shares down 4p to 39p.

A further pounds 712,000 provision for the rump of the leases on Chelsea Man shops, which Vivat has been unable to sell since the purchaser went into receivership, and additional exceptional costs were partly offset by an exceptional profit from a German disposal.

Christopher Burnett, Vivat's chairman, said the group's restructuring process had almost ended. During the past 12 months it had closed its German business, reduced bad debts in Spain and restructured its French sales force. 'We have brought the group back to its core,' he said. Overhead costs rose 5.6 per cent last year but were almost flat before currency translation.

Turnover on continuing business fell 2.9 per cent before currency gains. Sales in the UK increased, although the company said trading conditions were still difficult, with no possibility of price increases. Conditions in Vivat's biggest markets, France and Belgium, were 'very tough', and at least two years behind the high street recovery in Britain.

Mr Burnett said Vivat would be making a significant investment in marketing to restore Lee Cooper's market share. The group's financial difficulties had led to cuts in marketing expenditure and eroded market share from its peak in the early 1980s - even though Lee Cooper is still the number two jeans brand in France and Belgium, and number five in the UK.

''I will spend as much as I can afford. We are turning workwear into a fashion item, and this is a classic marketing issue,' Mr Burnett said. He said that the group had developed its strategy, but because it would not bring instant returns there could be an adverse impact on profits in the short term.

Disposals and controls on working capital reduced gearing from 51 per cent to 44 per cent at the end of 1993. The dividend for the year rose to 1.25p from 1p.