Austin Reed axes dividend

RECOVERING retail group Austin Reed withheld its final dividend today after concluding that the pace of recovery did not justify a payout to shareholders.

The company reported an expected increase in underlying full-year losses but insisted that it had begun to achieve the aimed for turn-around.

Despite this, the group's Country Casuals business has remained stubbornly indifferent to restructuring. The first 10 weeks of the current year have seen little signs of improvement with sales down 14% at Country Casuals and 11% on a like-for-like business. Chief executive Nick Hollingworth insisted that this reflected the decision to restrict promotional activity and thereby increase margins.

Full-year figures today showed the extent of the difficulties facing the group. Austin Reed reported a pre-tax loss of £1.9m from a restated £1.4m last time, but there was good news in the shape of an £800,000 profit in the second half of the year. The figures include an exceptional charge of £5.7m, which includes one-off costs associated with the restructuring, giving a total pre-tax loss of £7.6m, compared to a restated profit of £700,000.

Like-for-like sales, meanwhile, were up 7% at Austin Reed stores but down 8% at Country Casuals. Full-year sales at the group as a whole were flat at £111.5m, which reflects the impact of closed space.

Hollingworth, who has been in charge for a year, said the company remained committed to turning Country Casuals around and said margins in the business had significantly increased during the second half. But, he admitted, the full effect of repositioning the stores would not be seen until the second half of the current financial year.

The change programme at Austin Reed has seen three unprofitable stores closed, a clearout of old stock which didn't sell when it was brought in and the closure of Country Casuals Canada. Austin Reed now sells through 85 branches, of which 42 are prime stores, 10 are outlet stores and 33 are concessions.

Hollingworth insisted that changes were taking effect and would see Austin Reed return to recovery. But he made no apology for the decision not to make a final dividend payment to investors, declaring that the company would have to demonstrate a sustained recovery before dividend payments are resumed.

In Austin Reed's core stores business, meanwhile, the main growth areas were menswear, including suits, casual jackets, trousers and shoes. Womenswear sales were disappointing, reflecting tough competition on the High Street.