RNS Number:3792S
Merchant Retail Group PLC
24 November 2003
24 NOVEMBER 2003
MERCHANT RETAIL GROUP PLC ("Merchant Retail")
(The Specialist Perfumery Retailer and Department Stores Group)
INTERIM RESULTS FOR THE 6 MONTHS ENDED 27 SEPTEMBER 2003
6 months ended 27 September 2003 2002 Change
Sales (incl VAT) #69.43m #64.03m +8%
Profit before tax #3.16m #2.52m +25%
Earnings per share 2.01p 1.69p +19%
Dividend per share 0.75p 0.50p +50%
Group
* Profit before tax up 25%
* Dividend per share up 50%
The Perfume Shop
* Rapid growth continues
* Like for like sales up 13%
* 12 new stores brings total to 97
* New supplier partnership with Clarins
* First opening in Eire
* Sales up 25% to #34.69m. Profit before tax up 75% to #2.50m
Department Stores
* Division affected by slow down in consumer spending
* Double digit return on assets employed
* De Gruchy Cosmetics Hall sales up 44%
* Tynedale Park sales up 10% over 2 years
* Sales down 4% to #34.74m. Profit before tax down 26% to #1.68m
Outlook
* Well prepared for key Christmas period
* On course for another year of significant growth
For further information please contact:
Philip Newton (Chief Executive) 01494 894000
Ann-Marie Wilkinson (Beattie Financial) 020 7398 3300 / 07730 415019
Store Locations:
The Perfume Shop
Aberdeen Grimsby Poole
Barnsley Guildford Portsmouth
Basingstoke Hanley Preston
Birkenhead Harlow Reading
Birmingham Harrow Redditch
- Bull Ring Hemel Hempstead Romford
- Merry Hill Hull Sheffield
- Pallasades Ilford Shrewsbury
Blackburn Ipswich Solihull
Blackpool Leeds Southampton
Bluewater (Kent) - St Johns - Marlands Centre
Bootle - White Rose - West Quay
Brighton Leicester Street
Bristol - Fosse Park Sutton
- Cribbs Causeway - The Shires Swansea
- The Galleries Liverpool Telford
Bromley Livingston Thurrock
Cardiff London Tunbridge Wells
Chelmsford - Broadgate, Liverpool Uxbridge
Street
Cheltenham - High Street, Kensington Wakefield
Chester - Oxford Street Watford
Clydebank - Victoria Wolverhampton
Coventry Luton Wood Green
Crawley Maidstone
Croydon Manchester NORTHERN IRELAND
Derby - Arndale Centre Ballymena
Dundee - Trafford Centre Bangor
East Kilbride Mansfield Belfast
Eastbourne Middlesbrough Craigavon
Edinburgh Milton Keynes Foyleside
- Ocean Terminal Newcastle Newtownabbey
- St James Centre - Eldon Centre
- The Gyle - Metro Centre EIRE
Glasgow Norwich Dublin
- Braehead Nottingham - Blanchardstown
- Buchanan Galleries Oxford - ILAC Centre
- Parkhead Perth
- St Enochs Peterborough
Joplings
Joplings, Sunderland Tynedale Park, Hexham
Robbs, Hexham Woodwards, Leamington Spa
A de Gruchy, St Helier, Jersey
MERCHANT RETAIL GROUP PLC ("Merchant Retail")
(The Specialist Perfumery Retailer and Department Stores Group)
INTERIM RESULTS FOR THE 6 MONTHS ENDED 27 SEPTEMBER 2003
BUSINESS REVIEW
This has been another strong first half for the Group with profits before tax of
#3,160,000 an increase of 25 % compared to last year's #2,520,000. The results
for the half year will continue to encourage confidence that we are on the right
course for yet another year of significant growth. Sales including VAT increased
from last year's #64.03m to #69.43m this year.
We have made clear our intentions to continue a progressive dividend policy and
will be increasing the interim payment by 50% to 0.75p. This will be paid on 2
January 2004 to those shareholders on the register at 5 December 2003.
The trading performance of our two divisions, The Perfume Shop and the
Department Stores, has remained very much as it was when we last reported in
June. TPS has continued its excellent progress, but Joplings and De Gruchy have
found the going much tougher.
THE PERFUME SHOP (TPS)
Following another outstanding performance again last year, the business has
continued to maintain a pace that has shown no sign of slacking. Sales during
the first six months have increased by 25% to #34.69m and the barometer by which
the management team judge the real progress being made, Like for Like sales
growth, has been at a level of 13%. A considerable achievement.
A profit of #2,504,000 is an advance of 75% against last year's comparable
numbers of #1,427,000.
This is clearly an excellent performance and one that will stand comparison
against any retail competitor. TPS is now an established part of the High Street
and is able to capitalise on the solid foundations developed throughout the
entire business to ensure delivery of the best standards of service for the most
important people to TPS...our customers.
Much of the sales growth is attributable to the development of our people and
the knowledge they are able to give to the TPS customer in a friendly and
unbiased manner. We cannot over emphasize the importance that training has
within TPS; our budget for this area of the business is significant and is an
investment well made. We believe our customer trusts us to provide them with
premium brands in an environment and at a value where they are happy to shop. We
are determined to continue fulfilling these expectations.
During the course of the year we have developed and strengthened our supply
arrangements. We are pleased that, after discussions taking place over a number
of years, a partnership with Clarins has been confirmed for the supply of the
Thierry Mugler brand Angel and the complete range of these products is now fully
available to our customers.
By Christmas we will be trading from 97 stores, having opened new shops at
Birmingham Bullring, Harlow, Bootle, Livingston, Craigavon (NI), Bangor (NI),
Street, Oxford, Clydebank and Wakefield.
We have also opened two stores in Dublin and these are the first of a number of
outlets we expect to open in the Republic of Ireland.
Further work has been completed with our strategy for an entry in to the
Australian retail market with TPS and we are hopeful that there will be firm
plans to present when we announce our full year results.
We continue with the development work of the sister company to TPS that will
present skincare and colour in a retail format consistent to, and with the same
values as, TPS. We are making steady and encouraging progress and it is very
much a case of "so far so good". We are pleased with all that we have learnt
and are learning and plan a second trial in the spring of next year.
DEPARTMENT STORES DIVISION (DS)
We are disappointed with the performance of this side of the business, however,
as was pointed out earlier this year the majority of our competitors have found
themselves in the same boat. Whilst that is no consolation, it is some comfort
to know that the reduction in customer spend is not restricted to Joplings or De
Gruchy alone.
There are a number of reasons that this has happened. Firstly we have not been
helped by the weather and retailers are seen to offer this as an excuse, but it
is often a reason why customers sometimes defer or even cancel a purchase
altogether. Secondly, Department Store demographics favour the more mature
customer for which the much published pension issues must feature high in their
considerations, with a subsequent and consequently cautionary approach to their
use of disposable income.
Trading times such as these have been experienced by the sector before and it is
important to remember that times change and will do so again. It is vital that
we continue to develop our stores, people and our offer so that we provide the
customer with an attractive reason to return. The Group's Department Stores are
all freehold and whilst the returns currently generated by this part of the
business are disappointing to the management team they still deliver a double
digit yield upon the assets employed.
JOPLINGS
Sales have declined from #27.01m to #25.76m, a decrease in LFL sales of 5%.
Profit has reduced by 25% from #1,226,000 to #924,000.
The transition of Tynedale from a quasi department store to a "destination"
retail outlet centre is progressing well. The radical change in offer was
always an investment for the medium to long term, and not without short term
pain and difficulties, as both our existing and new customers become aware of
Tynedale in its new coat! This has not been helped by competitive openings at
Dalton Park and North Shields which have provided the customer with more choice,
as well as the UK High Street which has been in discount mode all summer.
Although sales have declined 7% against strong comparisons last year, on a 2
year basis sales have grown by 10%. Our confidence in the repositioning of
Tynedale has not been at all diminished, but in the light of current trading
circumstances and the importance of protecting the existing sales base some of
our medium term plans for developing Tynedale may have to be delayed.
Robbs of Hexham now has the benefit of a re-organised and modernised selling
layout which will assist its second half trade. Whilst Sunderland and
Leamington have seen a weakening of sales it is worth making the point that all
of the division's stores produce an appropriate contribution to the investment
within them and remain profitable.
DE GRUCHY
Although Jersey has suffered from a restructuring of the Finance industry with a
consequent number of job losses and the Tourist Industry has not yet found its
feet again, De Gruchy has fared better than its mainland counterparts. Sales
have seen a smaller reduction from #9.17m to #8.98m, a decline of 2%.
Profitability has reduced by 28%, from #1,045,000 to #757,000.
This remains a quality and high contributing business, we now have confirmed
plans to commence the second phase of the refurbishment of the ground floor of
the store. Phase one which was the Fragrance and Cosmetic Hall continues to
provide significant like for like sales growth of 44% and this is an
encouragement to us for continuing investment. The next phase which will cost
#1.5m will include accessories, young fashion and homeware space. It is planned
to commence these works soon after Christmas and have the new floor ready for
Easter.
The planning approval referred to in last year's annual report has now been
confirmed and considerably enhances the value of this important part of the
Group. De Gruchy is a business that has been considerably underinvested in
during the past. Our focus since the acquisition of De Gruchy was to repay the
not inconsiderable debt incurred to make the purchase. With this now done we can
move towards improving, in all respects, the offer made to the customer. As
always though, we shall do this on a "brick by brick" approach with appropriate
levels of capital spent and its return evaluated.
SUMMARY
It has been an excellent first half with the disappointment of the DS division
being more than compensated for by another strong performance at TPS. Despite
the difficult trading conditions being experienced by the DS division we remain
confident of achieving another year of progress. Whilst Christmas is key to the
success of both our businesses we are well prepared for this important trading
time and are determined to once again deliver the goods.
A Christmas Trading Statement will be issued on Thursday 15 January 2004.
BRIAN O'CALLAGHAN - CHAIRMAN
PHILIP NEWTON - CHIEF EXECUTIVE
MERCHANT RETAIL GROUP PLC
GROUP PROFIT AND LOSS ACCOUNT
for the 26 weeks ended 27 September 2003
Notes 26 weeks 26 weeks 52 weeks
ended ended ended
27 September 28 September 29 March
2003 2002 2003
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Turnover 1 60,769 56,208 142,363
----------- ----------- -----------
Operating profit 2 3,467 3,068 14,469
Interest (307) (548) (1,008)
----------- ----------- -----------
Profit before taxation 3,160 2,520 13,461
Taxation (976) (704) (3,783)
----------- ----------- -----------
Profit after taxation 2,184 1,816 9,678
Dividends - including non-equity (823) (541) (2,721)
----------- ----------- -----------
Transfer to reserves 1,361 1,275 6,957
======= ======= =======
Earnings per ordinary share
Basic 2.01p 1.69p 9.02p
======= ======= =======
Fully diluted 1.98p 1.65p 8.80p
======= ======= =======
Dividend per ordinary share 0.75p 0.50p 2.50p
======= ======= =======
The interim statements have been prepared on the basis of the accounting
policies set out in the Company's 2002/03 Annual Report and Accounts. The
statements, which have not been audited by the Company's auditors, were approved
by the Board of Directors on 24 November 2003.
The comparative figures in respect of the 52 weeks ended 29 March 2003 have been
extracted from the accounts which have been delivered to the Registrar of
Companies. The auditors' report on those accounts was unqualified and did not
contain any statement under section 237 of the Companies Act 1985.
Reconciliation of movements in shareholders' funds
Profit for the financial period 2,184 1,816 9,678
Dividends (823) (541) (2,721)
----------- ---------- ----------
1,361 1,275 6,957
Shares issued net of costs 50 25 25
Movement on share scheme reserve - - 1,038
----------- ---------- ----------
Net change in shareholders' funds 1,411 1,300 8,020
Opening shareholders' funds 50,891 42,871 42,871
----------- ---------- ----------
Closing shareholders' funds 52,302 44,171 50,891
======= ======= =======
MERCHANT RETAIL GROUP PLC
ABRIDGED GROUP BALANCE SHEET
as at 27 September 2003
27 September 2003 28 September 2002 29 March 2003
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Fixed assets
Intangible asset - purchased goodwill 1,345 1,430 1,388
Tangible assets 56,027 54,661 55,252
---------- ---------- ----------
57,372 56,091 56,640
Current assets
Investments 426 431 426
Stocks 20,522 18,400 16,949
Debtors 7,982 7,984 8,142
Cash at bank and in hand 826 687 952
---------- ---------- ----------
29,756 27,502 26,469
Creditors (amounts falling due within 1 year) (17,307) (15,257) (19,947)
Debt finance (16,468) (23,004) (10,971)
Provisions for liabilities and charges (1,051) (1,161) (1,300)
---------- ---------- ----------
Net assets 52,302 44,171 50,891
====== ====== ======
MERCHANT RETAIL GROUP PLC
GROUP CASH FLOW STATEMENT
For the 26 weeks ended 27 September 2003
Notes 26 weeks 26 weeks 52 weeks
ended ended ended
27 September 28 September 29 March
2003 2002 2003
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Net cash inflow from operating activities 3 773 1,726 18,693
Returns on investments and servicing of finance (91) (607) (1,230)
Taxation (2,096) (1,466) (3,194)
Capital expenditure and financial investment (2,079) (2,496) (4,205)
Equity dividends paid (2,180) (1,616) (2,176)
---------- ---------- ---------
Net cash flows before financing (5,673) (4,459) 7,888
Financing 35 (4,984) (4,994)
---------- ---------- ----------
(Decrease)/increase in cash 4 (5,638) (9,443) 2,894
====== ====== ======
MERCHANT RETAIL GROUP PLC
NOTES TO THE INTERIM STATEMENT
26 weeks ended 27 26 weeks ended 28 52 weeks ended
September 2003 September 2002 29 March 2003
#'000 #'000 #'000
1 Turnover (excl. VAT)
The Perfume Shop 29,525 23,702 74,151
Joplings 22,263 23,332 49,002
A de Gruchy 8,981 9,174 19,210
---------- ---------- ----------
60,769 56,208 142,363
====== ====== =====
2 Operating Profit
The Perfume Shop 2,504 1,427 11,253
Joplings 924 1,226 3,331
A de Gruchy 757 1,045 2,438
---------- ---------- ----------
4,185 3,698 17,022
Central services and other (718) (630) (2,553)
---------- ---------- ----------
3,467 3,068 14,469
====== ====== =====
3 Reconciliation of operating profit to operating cash flow
Operating profit 3,467 3,068 14,469
Depreciation and amortisation 1,347 1,217 2,477
Movement in working capital and provisions (4,041) (2,559) 1,747
---------- ---------- ----------
Net cash flows from operating activities 773 1,726 18,693
====== ====== =====
4 Reconciliation of net cash flow to movement in net debt
(Decrease)/increase in cash in the period (5,638) (9,443) 2,894
Decrease in debt and lease financing 15 5,009 5,019
---------- ---------- ----------
Change in net debt from cash flows (5,623) (4,434) 7,913
New finance leases - - (49)
---------- ---------- ----------
Movement in net debt in the period (5,623) (4,434) 7,864
Net debt at start of period (10,019) (17,883) (17,883)
---------- ---------- ----------
Net debt at end of period (15,642) (22,317) (10,019)
====== ====== =====
MERCHANT RETAIL GROUP PLC
NOTES TO THE INTERIM STATEMENT
The Directors note the issue of the amendment to FRS 5 (Application note G:
Revenue recognition) on 13 November 2003. Historically the department stores
have shown sales from concessions on a gross basis in accordance with industry
practice. Application note G requires such sales to be shown on a net basis. Had
the requirements of the amendment been adopted in the interim results, turnover
would have been as follows:
26 weeks ended 27 26 weeks ended 28 52 weeks
September 2003 September 2002 ended 29
March 2003
#'000 #'000 #'000
Turnover 51,401 46,933 122,924
====== ====== =====
The Group's reported profits, cash flows and balance sheet would not have
changed. The Group will adopt the requirements of the amendment in the year end
financial statements.
Copies of this statement are being sent to all shareholders. Copies are also
available at the registered office of the Company, Cypress House, The Gateway
Centre, Coronation Road, Cressex Business Park, High Wycombe, Bucks HP12 3SU.
This information is provided by RNS
The company news service from the London Stock Exchange
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