Bottom Line: Dawson ships out

IF DAWSON'S latest profits warning is a precursor to news that it will shut its loss-making US Morgan Apparel, it is hard to quibble with the decision.

Morgan Apparel produces low- ticket items like T-shirts and sweat shirts in the high manufacturing cost environment of the Eastern Seaboard. In the face of competition from the developing world Dawson has not been able to square the circle.

Perhaps the only surprising thing is that Dawson spent so long trying to make a living from this impossible situation.

Dawson shares have underperformed the market by 50 per cent during the past year. But at 134p they are still trading at a more than generous 22 times earnings, on best guess forecasts, for the year to March.

Without the losses from Morgan Apparel profits will strengthen. The high-quality Pringle and Ballantyne brands also underpin the business and may prove attractive to a predator.

Takeover possibilities should halt the share price decline. But if no bid materialises progress from here may be slow.