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Hot Features
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RNS Number:3134Q
Retail Stores PLC
30 September 2003
FOR IMMEDIATE RELEASE
30th September 2003
RETAIL STORES PLC:
PRELIMINARY RESULTS FOR 12 MONTHS TO 30TH JUNE 2003
HIGHLIGHTS
*Further reduction in operating losses before exceptional items and brand
impairment to #1.5m from #1.9m last year
*Overall operating losses reduced to #2.2m from #13.3m last year
*Despite difficult trading environment during second half, total sales
virtually unchanged at #46.5m against #46.8m
*Gross margins remained strong over period while cost base fell
*Strengthened management team with key appointments in: Buying, Retail
Operations, Marketing and Visual Merchandising
*Increase in Liberty "own brand" products through Autumn/Winter 2003 in
flagship store with planning underway for expansion into international
markets.
*Increased retailing area delivered through relocation of head office to
adjacent building - creating a further 10,000 sq ft of retail space
"We are looking to the Christmas trading period with confidence and optimism as
the effects of Liberty's strengthened skill base are seen.We continue to be
focused on returning this landmark store to profitability although we remain
cautious about the short term economic outlook. We now have an excellent
management team with ability and dedication to drive the business forward and
capitalise on the opportunities for growth." Richard Balfour-Lynn, Executive
Chairman.
-more-
Contact: Retail Stores PLC Tel: 020 7734 1234
Iain Renwick, Chief Executive
Nick Mather, Finance Director
Baron Phillips Associates Tel: 020 7920 3161 or 07050 124119
Baron Phillips
CHAIRMAN'S STATEMENT
for the period ended 30th June 2003
The steady progress we reported at the half year stage was largely reversed in
the second six months by the impact of the Gulf War combining with the London
transport disruption caused by the introduction of the Congestion Charge and the
closure of the Central Line. These issues resulted in lower footfall throughout
London's West End by between 10% and 20%. However I can report that since the
year end there has been a steady improvement in footfall both at the Regent
Street flagship store and our outlets at Heathrow.
Against this background, total sales for the 12 months to 30th June 2003
remained virtually unchanged at #46.6m against the previous year's #46.8m.
However, it is encouraging to note that Liberty's underlying business has shown
steady improvement with a further reduction in operating losses before
exceptional items and brand impairment to #1.5m compared to #1.9m last year.
It is also pleasing to report that our gross margins remained strong and our
cost base has started to fall. The full impact of our drive to cut costs and
increase margins will begin to be seen during the current year, as will many of
the changes we have implemented.
One of the most important areas of change has been the strengthening of
Liberty's management team following the arrival of Iain Renwick as Chief
Executive in November 2002. Recent key appointments have been made in a range of
areas including: Buying, Retail Operations, Marketing and Visual Merchandising.
The impact of stronger management is already being seen throughout the store and
reflects a more dynamic retail offer. Throughout Autumn more changes to the
store's retail offer will become obvious as the programmes from our strengthened
buying teams are fully implemented.
These developments are part of the overall revitalisation programme that aims to
reposition Liberty, and the Liberty brand, re-establishing the store as a
leading retail destination. As part of that programme the team is working hard
to create coherent ranges of Liberty own brand products that will generate sales
and improve margins, not only in the flagship store but in other leading
international retail outlets.
CHAIRMAN'S STATEMENT
for the period ended 30th June 2003
The rate of introduction of Liberty own brand products will increase through
Autumn and Winter, especially in areas such as childrenswear, men's shirts and
suits, ladies lingerie and shirts, food and beauty. An own brand development
design team is being recruited to create a two year programme focusing on
Homeware, Accessories, Beauty and Ladieswear fashion.
The effects of these changes are already being seen in a number of key areas. In
Homeware, for example, we have strengthened the buying team and are introducing
a more contemporary and unique range of products. This is perhaps best seen in
our kitchen and related delicatessen department where there is an increasingly
wide range of exclusive products on offer that are proving popular with our
customers.
Another area that is currently undergoing dramatic change is Menswear. A more
co-ordinated and cutting edge approach has been introduced and we are expanding
the product offer to include more fashionable suits, casualwear and shirts with
a look that is both contemporary and bold.
We have also freed up retailing space on the fourth floor of Tudor House by
relocating the head office to space in the adjacent Regent House. Part of the
fourth floor was reinstated before the year end while the remaining space will
come on stream during the course of the current year adding a further 10,000 sq
ft of retailing to Tudor House.
Despite a good July Sale, the new financial year has started slowly, as West End
retailing suffered from the impact of the summer's heat wave. However, we are
looking to the Christmas trading period with confidence and optimism as the
effects of Liberty's strengthened skill base are seen.
The Christmas period will see the introduction of new merchandise across a
number of areas in the store. In addition to our newly extended Menswear area, a
number of areas of the Ladieswear floor have undergone a complete transformation
over the last few weeks. Our Christmas decoration and gift offer will be
dramatically displayed on the newly revamped fourth floor in Tudor House from
next month and at the same time new Home and Gift products will have arrived in
the store.
CHAIRMAN'S STATEMENT
for the period ended 30th June 2003
We continue to be focused on returning this landmark store to profitability
although we remain cautious about the short term economic outlook. We now have
an excellent management team with the ability and dedication to drive the
business forward and capitalise on the opportunities for growth.
Richard Balfour-Lynn
EXECUTIVE CHAIRMAN
London
30th September 2003
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the period ended 30th June 2003
Period ended Year ended
30th June 29th June
2003 2002
Notes #'000 #'000
-------------------------------- ------ ---------- ---------
Turnover 1 46,550 46,798
Cost of sales (28,744) (28,952)
-------------------------------- ------ ---------- ---------
Gross profit 17,806 17,846
Selling and distribution costs (including (20,956) (21,246)
exceptional operating charges)
Administrative expenses (including brand (2,671) (13,549)
impairment)
Other operating income 3,608 3,687
-------------------------------- ------ ---------- ---------
Operating loss (2,213) (13,262)
-------------------------------- ------ ---------- ---------
Operating loss before exceptional (1,519) (1,885)
operating charges and brand impairment
Exceptional operating charges 2 (694) -
Brand impairment - (11,377)
-------------------------------- ------ ---------- ---------
Operating loss (2,213) (13,262)
-------------------------------- ------ ---------- ---------
Loss on ordinary activities before (2,213) (13,262)
interest and taxation
Net interest payable and similar charges (2,435) (2,278)
-------------------------------- ------ ---------- ---------
Loss on ordinary activities before (4,648) (15,540)
taxation
Taxation on loss on ordinary activities (467) (477)
-------------------------------- ------ ---------- ---------
Loss on ordinary activities after (5,115) (16,017)
taxation
Equity minority interests (310) (298)
Non-equity minority interests (55) (132)
-------------------------------- ------ ---------- ---------
Loss attributable to ordinary (5,480) (16,447)
shareholders
-------------------------------- ------ ---------- ---------
Undeclared non-equity preference (23) (46)
dividends
-------------------------------- ------ ---------- ---------
Retained loss for the period (5,503) (16,493)
-------------------------------- ------ ---------- ---------
Basic and diluted loss per 3 (24.3p) (73.0p)
share
Basic and diluted loss per share 3 (21.3p) (22.7p)
before exceptional operating
charges
-------------------------- ------ ---------- ---------
The results for the current period and previous year relate to continuing
operations
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the period ended 30th June 2003
Period ended Year ended
30th June 29th June
2003 2002
#'000 #'000
------------------------------------ ---------- ---------
Loss for the period (5,480) (16,447)
Unrealised surplus/(deficit) on revaluation of 1,651 (184)
property
Currency translation differences on foreign (141) (76)
currency net investments
------------------------------------ ---------- ---------
Total recognised gains and losses for the period (3,970) (16,707)
------------------------------------ ---------- ---------
All recognised gains and losses are attributable to equity shareholders'
interests.
NOTE OF CONSOLIDATED STATEMENT OF HISTORICAL COST PROFITS AND LOSSES
for the period ended 30th June 2003
Period ended Year ended
30th June 29th June
2003 2002
#'000 #'000
----------------------------------- ---------- ---------
Reported loss on ordinary activities before (4,648) (15,540)
taxation
Difference between historical cost of depreciation 1 24
charge and depreciation charge based on revalued
amounts
----------------------------------- ---------- ---------
Historical cost loss on ordinary activities before (4,647) (15,516)
taxation
----------------------------------- ---------- ---------
Historical cost loss retained after taxation, (5,502) (16,469)
minority interests and dividends
----------------------------------- ---------- ---------
CONSOLIDATED BALANCE SHEET
at 30th June 2003
30th June 29th June
2003 2002
Notes #'000 #'000
------------------------------- -------- --------- ---------
Fixed assets
Intangible asset 4 18,200 18,200
Tangible assets 5 79,029 77,845
------------------------------- -------- --------- ---------
97,229 96,045
------------------------------- -------- --------- ---------
Current assets
Stocks 5,537 6,222
Debtors:
amounts falling due within one year 6,132 9,136
amounts falling due after more than one year 1,138 701
Cash 4,513 3,246
------------------------------- -------- --------- ---------
17,320 19,305
Creditors: amounts falling due within one (12,423) (15,870)
year
------------------------------- -------- --------- ---------
Net current assets 4,897 3,435
------------------------------- -------- --------- ---------
Total assets less current liabilities 102,126 99,480
Creditors: amounts falling due after more than (51,109) (44,240)
one year
Provisions for liabilities and charges - (120)
------------------------------- -------- --------- ---------
Net assets 51,017 55,120
Capital and reserves
Called up share capital 6,036 6,036
Merger reserve 61,503 61,503
Revaluation reserve 8,887 7,237
Profit and loss account (27,727) (22,107)
------------------------------- -------- --------- ---------
Total shareholders' funds 48,699 52,669
------------------------------- -------- --------- ---------
Analysed as:
------------------------------- -------- --------- ---------
Equity shareholders' funds 48,245 52,238
Non-equity shareholders' funds 454 431
Equity minority interests 1,740 1,741
Non-equity minority interests 578 710
------------------------------- -------- --------- ---------
---------
51,017 55,120
-------- --------- ---------
Included in called up share capital is an amount attributable to non-equity
shareholders
CONSOLIDATED CASH FLOW STATEMENT
for the period ended 30th June 2003
Group Group
2003 2002
#'000 #'000
Notes
-------------------------------- ------ ---------- ----------
Net cash inflow from operating activities 6 4,606 211
Returns on investments and servicing of 7 (3,471) (2,579)
finance
Tax paid (375) (614)
Capital expenditure 8 (2,329) (9,280)
-------------------------------- ------ ---------- ----------
Net cash outflow before financing (1,569) (12,262)
Financing 9 3,000 29,000
-------------------------------- ------ ---------- ----------
Increase in cash during the period 1,431 16,738
-------------------------------- ------ ---------- ----------
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
for the period ended 30th June 2003
Group Group
2003 2002
#'000 #'000
Increase in cash during the period 10 1,431 16,738
Increase in loans during the period 10 (3,000) (29,000)
-------------------------------- ------ ---------- ----------
Increase in net debt during the period (1,569) (12,262)
Translation differences 10 (164) -
-------------------------------- ------ ---------- ----------
Movement in net debt during the period (1,733) (12,262)
Opening net debt 10 (41,754) (29,492)
-------------------------------- ------ ---------- ----------
Closing net debt 10 (43,487) (41,754)
-------------------------------- ------ ---------- ----------
NOTES TO THE ACCOUNTS
1. DIVISIONAL ANALYSIS
Loss Loss
before before
interest Net interest Net
and operating and operating
Turnover taxation assets Turnover taxation assets
2003 2003 2003 2002 2002* 2002
#'000 #'000 #'000 #'000 #'000 #'000
By class of
business:
Retail 35,233 (3,985) 92,381 35,611 (14,774) 94,963
Wholesale 11,317 1,772 1,750 11,187 1,512 1,911
--------------- -------- -------- -------- -------- ------- --------
46,550 (2,213) 94,131 46,798 (13,262) 96,874
--------------- -------- -------- -------- -------- ------- --------
By geographical
origin:
United Kingdom 40,996 (3,318) 93,205 40,160 (14,306) 95,513
Japan 5,554 1,105 926 6,526 1,077 1,413
North America - - - 112 (33) (52)
--------------- -------- -------- -------- -------- ------- --------
46,550 (2,213) 94,131 46,798 (13,262) 96,874
--------------- -------- -------- -------- -------- ------- --------
By geographical destination:
United Kingdom 36,860 36,820
Japan 5,738 6,782
North America 483 378
Other 3,469 2,818
--------------- -------- -------- -------- -------- ------- --------
46,550 46,798
--------------- -------- -------- -------- -------- ------- --------
*The comparative has been restated to more accurately reflect the loss before
interest and tax relating to each class of business.
The segmental analysis of operations reflects the structure of the Group. Retail
includes the UK retail operations at Regent Street and Heathrow. Wholesale
includes the results of the UK and Japanese fabric businesses. Net operating
assets exclude short term deposits, cash, bank balances and loans.
The Retail loss before interest and taxation includes net rental income from
properties and is after deducting exceptional operating charges and brand
impairment.
2. EXCEPTIONAL OPERATING CHARGES
2003 2002
#'000 #'000
Redundancy and recruitment costs 643 -
Closure costs 51 -
-------------------------------- ------------- ----------
694 -
-------------------------------- ------------- ----------
During the period the Group underwent a major restructuring of its management
and business operations. The costs are not expected to re-occur.
NOTES TO THE ACCOUNTS
3. LOSS PER SHARE
The basic and diluted loss per share figures are calculated by dividing the loss
after taxation and minority interests by the weighted average number of ordinary
shares in issue of 22,603,000 (2002: 22,603,000).
2003 2002
Basic Basic
and and
2003 diluted 2002 diluted
#'000 pence #'000 pence
Loss for the financial period (5,503) (24.3p) (16,493) (73.0p)
and loss per ordinary share
Exceptional operating charges 694 3.0p - -
Brand Impairment - - 11,377 50.3p
------------------------------ ------- ------- ------- -------
Loss for the financial year and (4,809) (21.3p) (5,116) (22.7p)
loss per ordinary share before ------- ------- ------- -------
exceptional operating charges
------------------------------
As the exercise price of share options is equal to the average share price for
the period there is no difference between the basic loss per share and the
diluted loss per share.
4. INTANGIBLE ASSET - BRAND
Following the acquisition of Liberty plc during the six months ended 31st
December 2000, the Group has included the Liberty brand at its independent
valuation at the date of acquisition and conducted an impairment assessment at
the end of each financial period. An impairment assessment was conducted at 30th
June 2003, which confirmed that no additional impairment was necessary.
Group #'000
Cost at 29th June 2002 and 30th June 2003 29,577
Provision for impairment at 29th June 2002 and 30th June 2003 (11,377)
------------------------------------------ ----------
Net Book value at 29th June 2002 and 30th June 2003 18,200
------------------------------------------ ----------
NOTES TO THE ACCOUNTS
5. TANGIBLE FIXED ASSETS
Long Short Fixtures &
Freehold leasehold leasehold equipment Total
Group #'000 #'000 #'000 #'000 #'000
Cost or valuation
At 30th June 2002 37,600 36,650 297 6,221 80,768
Foreign exchange - - - (16) (16)
adjustment
Additions 944 422 2 781 2,149
Disposals (64) - - (167) (231)
Revaluation (1,730) 1,937 - - 207
------------------ -------- -------- -------- --------- --------
At 30th June 2003 36,750 39,009 299 6,819 82,877
------------------ -------- -------- -------- --------- --------
Depreciation
-------------- --- --- --- --- ---
At 30th June 2002 - - (60) (2,863) (2,923)
Foreign exchange - - - 14 14
adjustment
Charge for the (845) (624) (33) (1,055) (2,557)
period
Disposals 25 - - 149 174
Revaluation 820 624 - - 1,444
------------------ -------- -------- -------- --------- --------
At 30th June 2003 - - (93) (3,755) (3,848)
------------------ -------- -------- -------- --------- --------
Net book value 36,750 39,009 206 3,064 79,029
At 30th June 2003
------------------ -------- -------- -------- --------- --------
Net book value 37,600 36,650 237 3,358 77,845
At 29th June 2002
------------------ -------- -------- -------- --------- --------
Valuation
All of the Group's properties were valued as at 30th June 2003 by qualified
professional valuers working for the Company of DTZ Debenham Tie Leung,
Chartered Surveyors, ("DTZ") acting in the capacity of External Valuers. All
such valuers are Chartered Surveyors, being members of the Royal Institution of
Chartered Surveyors. All properties were valued on the basis of Market Value and
in accordance with the RICS Appraisal and Valuation Manual. The valuation of the
properties was #76.7 million (a valuation surplus of #1.6 million), which is
reflected in the table above.
NOTES TO THE ACCOUNTS
5. TANGIBLE FIXED ASSETS (continued)
The reconciliation of the values at which the properties are included in the
above table with the original cost less accumulated depreciation is as follows:-
Original cost
less Valuation Valuation
accumulated at at
depreciation at Valuation 30th June 29th June
30th June 2003 surplus 2003 2002
#'000 #'000 #'000 #'000
Freehold properties 30,797 5,953 36,750 37,600
Long leasehold 36,075 2,934 39,009 36,650
properties
Short leasehold 206 - 206 237
properties
--------------------
67,078 8,887 75,965 74,487
Fixtures and equipment 3,064 - 3,064 3,358
-------------------- ------------ --------- -------- ----------
At 30th June 2003 70,142 8,887 79,029 77,845
-------------------- ------------ --------- -------- ----------
The Group's properties are located within the United Kingdom. The historic cost
of the Group's properties in the table above includes capitalised interest at
30th June 2003 of #761,000 (2002: #761,000). The valuation of freehold and long
leasehold properties includes an amount attributable to operational properties
of #24,061,000 (2002: #27,461,000) and to land of #21,154,000 (2002:
#21,082,000).
6. RECONCILIATION OF OPERATING LOSS TO NET CASH INFLOW FROM OPERATING ACTIVITIES
2003 2002
#'000 #'000
Operating loss (2,213) (13,262)
Depreciation 2,557 2,073
Loss on disposal of fixed assets 57 -
Impairment of brand - 11,377
Decrease in provisions (120) (62)
Decrease in stock 633 2,659
Decrease/(increase) in debtors 2,880 (2,447)
Increase/(decrease) in creditors 812 (127)
-------------------------------------- -------- ---------
Net cash inflow from operating activities 4,606 211
-------------------------------------- -------- ---------
NOTES TO THE ACCOUNTS
7. RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
2003 2002
#'000 #'000
Equity dividend paid to minorities (172) -
Non-equity dividend paid to minorities (132) (317)
Bank arrangement fees (457) -
Interest paid (2,806) (2,278)
Interest received 96 16
-------------------------------------- -------- ---------
Returns on investments and servicing of finance (3,471) (2,579)
-------------------------------------- -------- ---------
8. CAPITAL EXPENDITURE
2003 2002
#'000 #'000
Purchase of tangible fixed assets (2,329) (9,280)
-------------------------------------- -------- ---------
9. FINANCING
2003 2002
#'000 #'000
Loans drawn down 48,000 45,000
Loans repaid (45,000) (16,000)
--------------------------------------- -------- --------
Financing 3,000 29,000
--------------------------------------- -------- --------
10. ANALYSIS OF NET DEBT
Movement Foreign
during currency
2003 period translation 2002
#'000 #'000 #'000 #'000
Available cash 4,513 1,431 (164) 3,246
--------------------------- ------- --------- --------- --------
Net cash 4,513 1,431 (164) 3,246
--------
Bank loan
Less than one year - 1,000 - (1,000)
More than one year (48,000) (4,000) - (44,000)
Net debt (43,487) (1,569) (164) (41,754)
--------------------------- ------- --------- --------- --------
NOTES TO THE ACCOUNTS
11. FINANCIAL INFORMATION
The financial information set out above does not constitute the Company's
statutory accounts for the period ended 30th June 2003 or 29th June 2002 but is
derived from those accounts. Statutory accounts for 2002 have been delivered to
the Registrar of Companies, and those for 2003 will be delivered following the
Company's Annual General Meeting. The auditors have reported on those accounts;
their reports were unqualified and did not contain statements under Section 237
(2) or (3) of the Companies Act 1985.
12. DESPATCH OF ACCOUNTS
The audited accounts of the Company are expected to be sent to shareholders
during October 2003. Thereafter copies will be available from the Company
Secretary, Filex Services Limited, 179 Great Portland Street, London, W1W 5LS.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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