Conran profits hit as stores go out of fashion

Sir Terence Conran's style empire has been hit by a slump as shoppers desert his stores.

Profits at the 73-year-old designer's group have fallen to their lowest level for more than a decade. Figures for Conran Holdings for the 12 months to the end of March show pre-tax profits dived by 36 per cent to ££1.2million.

The worst of the downturn was felt by his chain of Conran furnishings and homeware stores. They tumbled into the red after shoppers stayed away in favour of cheaper rivals such as Ikea. The Swedish company bought Habitat, which was founded by Sir Terence, in the Nineties.

Today, however, the Conran restaurants have increased their overall profits. Group sales were down from ££114 million to £108.5 million. The Conran shops made a £2.1million loss on turnover of £33million.

The performance of Conran's company has been steadily sliding. As recently as 2001 it made a profit of £7.6million, but has struggled since the September 11 attacks.

Executives at Conran Holdings said Londoners were moving home less often and spending less on furniture, but were still prepared to pay for a good meal. But design experts claimed South Kensington's

famous Conran Shop, hailed as a beacon of good taste when it opened in the Seventies, had been overtaken by rivals.

One, Stephen Bayley, said: "It was not so long ago that Peter Jones in Chelsea was seen as this backwardlooking, conservative shop favoured by elderly dowagers.

"Now you can buy the same merchandise as you get at the Conran Shop and with better service. At its best, shopping at Conran was like belonging to a club. Now it is sliding into complacency. It has been left to mediocre management to muddle through."

In a statement, Sir Terence and his chief executive Des Gunewardena said the loss "was mainly due to costs associated with investments in new systems, outsourcing of warehousing and distribution operations", as well as the closure of the Conduit Street outlet in the West End. The Paris Conran shop has also shut.

They added that "action taken, though depressing the group's results in the short term, will restore these operations to profitability in the long term".

The accounts point to problems at Conran's New York restaurant Guastavino's, described by one critic as "achingly empty".

Profits for Thameside restaurant Pont de la Tour were down 14 per cent at £959,000 on sales of £7.34 million, while at Quaglino's they fell 10 per cent to £791,000 on sales of £5.37 million. But Soho brasserie Mezzo made a profit of £174,000, compared to a £69,000 loss in 2003, and City restaurant Coq d'Argent made £1.01 million, up 18 per cent, on sales of £6.5 million.

The figures also highlight Sir Terence's huge personal commitment to the company. He has waived more than £2 million of dividends in the past two years and he charges no interest on long-term loans of almost £26 million to the business.

However, the accounts show two of his other private companies charged Conran Holdings a total of more than £1 million.