Brown & Jackson £9m in the red
DISCOUNT retailer Brown & Jackson today revealed a dramatic slide into the red but promised a rapid turnaround in its fortunes. The company, which operates the Poundtsretcher chain, announced a pre-tax loss of £9.6m for the half-year to 29 December compared to a profit of £20.8m a year earlier
Like-for-like sales remain flat in the first five weeks of the second half but the board said its interventions made over the last few months will lead to a turnaround in the business, with an improvement in the overall results.
The first half was hit by the £18.8m charge for goodwill written off after the revaluation of the cost of the acquisition of The Famous Brunswick Warehouse.
The company also operates What Everyone Wants and Your More Store chains.
Overall turnover was up by 6.2% to £262.5m and operating profit before goodwill impairment and amortisation was £10.9m, down from £21.8m in 2000.
The group has now put its expansion plan on hold and has decided to change its short term strategy to one of consolidation. Chairman CH Wiese said this will allow the business to concentrate on developing the existing stores in terms of enhancing the shopping environment and product ranges.
'Today's discount retail customer has high expectations and we are confident that Brown & Jackson will be able to meet these fast changing demands and once again will return to acceptable levels of profitability,' he said.
In addition to the change in strategy, the group decided to substantially reduce the price of older and slower moving stock. Price cuts affected results by £9.5m.
In the first half, Poundstretcher increased sales but saw operating profit drop 5.6%. Turnover in clothing was under pressure which led to reduced margins.
At Your More Store, sales increased by 6.5% and like for like sales were up 2.1% but operating profit was down by 54.8%.
At What Everyone Wants, sales were down by 1.8% and like-for-like sales were down 8.5% on the previous period. Previous operating profit of 1.5m turned into an operating loss of £4.8m.
In What Everyone Wants, the group discovered that its customers do not want to buy low priced products, unless they are fashionable, good quality and well presented. The group has made a number of management changes, as well as a reduction in the carrying value of stock.
At The Famous Brunswick Warehouse turnover was up but like-for-like sales were down. Operating profit of £0.9m last year turned into an operating loss of £1.6m. A new management team has been appointed.
