£21m hand-out for Alexon investors

CLOTHING retailer Alexon will use its results meeting on Monday to confirm that it is to give £21.2m to investors.

The company, which runs the Bay Trading and Envy chains along with 1,084 department store concessions, had a cash pile of £11m at the start of the year and is expected to generate a large surplus this year.

It will unveil plans to redeem 21.2m preference shares for £1 each. The management at Alexon, based in Luton, Bedfordshire, believe that by paying for the shares, they can save about £400,000 a year in dividends and simplify the balance sheet.

The reduction in the number of shares in circulation is expected to boost earnings per share by about 7%.

Alexon's shares have been star performers in the retail sector in the past six months, rising 66%, but the firm has been pressed over its plans for the cash. 'The company is cash generative and investors have rightly questioned what it planned for the reserves,' one analyst said. 'The savings to be made mean the restructuring is an obvious choice.'