Final Results
Retail Stores PLC
26 September 2001
RETAIL STORES PLC:
PRELIMINARY RESULTS FOR 12 MONTHS TO 30TH JUNE 2001
Highlights
Retail Stores plc was formed in April 2000 with the express purpose of
acquiring the department store group Liberty plc. This acquisition was
completed on 3rd July 2000 and the period covered by these results is from the
date of completion until 30th June 2001. Retail Stores plc is 68% owned by
Marylebone Warwick Balfour Group plc.
* Liberty streamlined into core activities of retailing and fabric
wholesaling.
* Withdrawn from all sub-scale loss-making ventures.
* Phase 1 of the transformation programme underway with a £9m investment
in 17,000 sq ft of retail space in the Regent Street section of the store
- re-opening in March 2002.
* Completed conversion of 54,000 sq ft of surplus space into serviced
offices managed by MWB Business Exchange.
* Foubert Estate sold for £9.5m contributing a profit of £2m.
'Liberty has made huge progress in developing a firm base from which to
create value from its unique retail, brand and property assets, although
we are realistic about the scale of change required and the time it will
take.
'The trading outlook is uncertain, both in terms of general consumer
confidence and tourist traffic, which accounts for approximately 25% of
Liberty's sales. But, with a gradually improving product mix, further
reductions in overhead and the opening of the refurbished Regent Street
store in March 2002, we hope to reduce losses in 2001/2002 and achieve
break-even the following year.' Richard Balfour-Lynn, Chairman.
* more -
Contact: Retail Stores PLC Tel: 020 7734 1234
Fiona Harrison, Chief Executive
Baron Phillips Associates Tel: 020 7397 8932
Baron Phillips
Chairman's Statement
This statement records the progress and developments since Retail Stores plc
completed its takeover of Liberty on 3rd July 2000. Results cover the period
from the date of acquisition until 30th June 2001. As Retail Stores plc was
formed specifically for the purpose of acquiring Liberty, there are no formal
comparative results.
I stated at the time of the acquisition that it would take up to five years to
reverse Liberty's decline and realise the full potential of the business. This
remains my firm belief and good progress has been made in laying the
foundations on which to rebuild the Company.
This first year has been one of rationalisation, simplification and
stabilisation. Liberty had experienced years of decline through frequent
changes of management and under-investment. The lack of a long-term focused
strategy had allowed extensive complexity to creep into the business despite
falling sales and high costs. Meanwhile, valuable assets in the form of the
Liberty brand and Liberty's property assets remained under-exploited.
Transforming the business
Fiona Harrison joined the Board as Chief Executive on 5th December 2000. Her
initial review of the business concluded that investment and management focus,
in the immediate future, must be directed to strengthening Liberty's retail
core to provide a healthy base from which to develop the wider potential of
its brand.
To achieve this, she also determined that the Company should simplify its
activities and withdraw from sub-scale loss-making ventures. Accordingly,
during the year, Liberty announced its withdrawal from its e-commerce, mail
order, and product wholesale businesses, together with its high fashion
Ready-to-Wear collection. This has simplified the business into two core
activities:-
* Retail, incorporating the London Flagship Store, plus shops at Heathrow
(Terminals 3&4) and Windsor
* Fabric, comprising a wholesale business based in the UK and a joint
venture with Seibu Department Stores in Japan.
The priority now is to transform the London flagship store into a modern
retail environment. We wish to establish it as London's leading store for
affluent and discerning shoppers with an individual sense of style, building
on Liberty's heritage and reputation for an eclectic and unusual mix of
products and brands.
Phase 1 of the reinvention programme is already underway with a £9m investment
in 17,000 sq ft of retail space in the Regent Street section of the store,
which is planned to re-open in March 2002. It will house a brand new cosmetics
and fragrance department on the ground floor, ladies shoes and lingerie on the
first floor and menswear and accessories plus a cafe/bar on the lower ground
floor.
Building on Liberty's reputation for innovation in design, the refurbished
space will provide an exciting retail environment to attract valuable Regent
Street footfall to the new face of Liberty.
New escalators will link the Regent Street shop to Tudor House at both first
and lower ground levels so encouraging customer circulation throughout the
store. Ultimately, the Liberty flagship store will provide an unrivalled
shopping experience with edited collections in fashion and home, gifts and
accessories, and supplemented with places to meet, eat and relax.
Liberty Brand
While work continues to transform the retail business, a strategic review is
being undertaken to determine the optimal route to exploit the value vested in
the Liberty brand. Liberty is already well known for its prints, ties, scarves
and gifts while a valuable print archive offers the potential for many new
developments. The review will be completed by April 2002.
Infrastructure and people
Liberty's antiquated IT systems, which preclude proper tracking and analysis
of the business, are being replaced during this year through an investment of
£1.5m in a new integrated IT system. This will link sales, merchandising and
accounting, so providing the accurate and immediate information required by
every modern retailer.
The business has been supported by a small team of senior interim executives
covering the key disciplines of retail operations, logistics and finance.
These executives have helped facilitate rapid change and have significantly
enhanced the Liberty management team's capability whilst the strategy was
being formulated and the business streamlined and stabilised. A longer-term
organisational structure has now been put in place. John Ball has moved from
his interim appointment to the permanent role of Managing Director - Retail.
Property
The conversion of 54,000 sq ft of surplus space in Lasenby House and above the
Regent Street store into serviced offices managed by MWB Business Exchange was
completed towards the year end and generated additional rental income to
Liberty of £0.7m in 2000/2001. This translates into an annualised figure of £
2.1m, thereby helping to underpin the retailing operations of the Company in
the years ahead.
In addition, during the year, we sold the Foubert Estate for £9.5m
contributing a profit of £2m to the year's results.
Financial Performance
During the year to June 2001 Liberty has traded through a turbulent period of
change and disruption. In particular the London flagship store released its
fourth floor from trading in September 2000 to accommodate the Liberty head
office and from 31st January 2001 the Regent Street portion of the store
closed for refurbishment. The combined effect of these changes was to reduce
the sales area by 30% for approximately half of the year.
In addition, the London store suffered a small, but widely publicised, fire in
November 2000 which significantly impacted sales in the run up to the
important Christmas trading period. Like many other London retailers, reduced
tourist traffic from Japan and the USA added yet another challenge to the
business. Together these events obviously had an adverse effect on the results
for the year to June 2001.
In Liberty's first year within Retail Stores plc, and with the change of year
end from January to June, there are few meaningful comparisons with the prior
12-month period. Nevertheless, we can report that total sales were down 12%
and the London flagship store some 15% lower, but this was largely in line
with the substantial reduction in space. Wholesale sales fell by 4% as a
result of lower sales in Japan.
Losses before sales of properties were £6.3m, resulting in a pre-tax loss of £
4.3m. Fixed assets are valued at £100.5m. The components of this are the
Liberty brand valued at £29.6m and the property portfolio of £70.9m, up by £
7.4m over the value at the date of acquisition.
Borrowings, at £34.3m, reflect funding of trading losses and the significant
investment to date in refurbishment of office and retail space across the
London flagship site.
Outlook
Liberty has made huge progress in developing a firm base from which to create
value from its unique retail, brand and property assets, although we are
realistic about the scale of change required and the time it will take.
The trading outlook is uncertain, both in terms of general consumer confidence
and tourist traffic, which accounts for approximately 25% of Liberty's sales.
But, with a gradually improving product mix, further reductions in overhead
and the opening of the refurbished Regent Street store in March 2002, we hope
to reduce losses in 2001/2002 and achieve break-even the following year.
Richard Balfour-Lynn
executive Chairman
London
26th September 2001
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 30th June 2001
The Company was incorporated on 7th April 2000 and hence these accounts cover
the period from 7th April 2000 to 30th June 2001. The group did not trade
until 3rd July 2000 when the company's offer for Liberty Plc was declared
unconditional.
Unaudited
Financial
Year ended
30th June
Notes 2001
£'000
Turnover 1 52,488
Cost of sales (31,652)
Gross profit 20,836
Distribution costs (26,081)
Administration expenses (3,138)
Other operating income 3,442
Operating loss (4,941)
Profit on disposal of fixed assets 1,990
Interest payable and similar items 2 (1,378)
Loss on ordinary activities before taxation (4,329)
Tax on loss on ordinary activities (626)
Loss on ordinary activities after taxation (4,955)
Equity minority interests (526)
Retained loss for the year (5,481)
Loss per share 3 (24.4p)
The results for the year relate to acquisitions.
There is no difference between losses as stated and losses on the historical
cost basis.
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 30th June 2001
Unaudited
Financial
Year ended 30th June
2001
£'000
Loss for the financial year (5,481)
Unrealised surplus on revaluation of property 7,445
Currency translation differences on foreign currency net (168)
investments
Total recognised gains and losses for the period 1,796
All recognised gains and losses are attributable to equity shareholders'
interests.
RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
for the period ended 30th June 2001
Unaudited
2001
£'000
Opening equity shareholders' funds -
Loss for the financial year (5,481)
Net revaluation surplus on fixed assets 7,445
Shares issued during the year 67,154
Currency translation differences on foreign currency net (168)
investments.
Closing equity shareholders' funds 68,950
CONSOLIDATED BALANCE SHEET
at 30th June 2001
Unaudited
2001
Notes £'000
Fixed assets
Intangible asset 4 29,577
Tangible assets 5 70,931
100,508
Current assets
Stocks 8,881
Debtors
Amounts falling due within one year 6 6,957
Amounts falling due after more than one year 6 581
Cash 4,794
21,213
Creditors: amounts falling due within one year 7 (34,501)
Net current liabilities (13,288)
Total assets less current liabilities 87,220
Creditors: amounts falling due after more than one year 8 (15,292)
Provisions for liabilities and charges (182)
Net assets 71,746
Capital and reserves
Called up share capital 6,614
Merger reserve 61,503
Revaluation reserve 7,445
Profit and loss account (5,649)
Shareholders' funds 69,913
Equity minority interests 1,833
71,746
Analysis of shareholders' funds
Equity shareholders' funds 68,950
Non-equity shareholders' funds 963
69,913
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30th June 2001
Unaudited
Financial Year
Notes 2001
£'000
Net cash outflow from operating activities 9 (3,655)
Returns on investments and servicing of finance (2,022)
Corporation tax paid (292)
Capital expenditure and financial investment (170)
Acquisitions (7,176)
Net cash outflow before financing (13,315)
Financing (177)
Decrease in cash during the year (13,492)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
for the year ended 30th June 2001
Unaudited
Financial Year
2001
£'000
Decrease in cash during the year (13,492)
Bank loan acquired with subsidiary undertakings (16,000)
Increase in net debt during the year (29,492)
Opening net debt -
Closing net debt (29,492)
NOTES TO THE ACCOUNTS
BASIS OF PREPARATION
The draft accounts on which this preliminary announcement is based have been
prepared on the going concern basis on the expectation that the Group will
secure additional financing facilities for its present requirements.
Negotiations to secure these facilities are well advanced and the Directors
expect these negotiations to be completed shortly and before the accounts are
finalised.
1. DIVISIONAL ANALYSIS
Unaudited Unaudited Unaudited
Turnover Profit/(loss) Net operating
Before interest Assets
£'000 £'000 £'000
By class of business:
Retail 37,694 (3,664) 70,156
Wholesale 14,794 713 1,506
Total 52,488 (2,951) 71,662
By geographical origin:
United Kingdom 44,879 (3,710) 69,595
Japan 7,464 685 2,078
North America 145 74 (11)
Total 52,488 (2,951) 71,662
By geographical destination:
United Kingdom 40,428
Japan 8,311
North America 608
Other 3,141
Sales to third parties 52,488
Notes
The segmental analysis of operations reflects the structure of the Group.
Retail includes the UK retail operations at Regent Street, Heathrow and
Windsor. Wholesale includes the results of Fabric and Japanese businesses.
Included within the results of retail is the £1,990,000 profit on disposal of
fixed assets.
Net operating assets excludes short term deposits, cash and bank balances and
loans.
2. INTEREST PAYABLE AND SIMILAR CHARGES
Unaudited
2001
£'000
Bank loans and overdrafts 1,904
Other loans 100
2,004
Less interest capitalised (626)
1,378
3. LOSS PER SHARE
The calculation of the loss per share is based on the loss on ordinary
activities after taxation and minority interests of £5,481,000, divided by the
weighted average number of ordinary shares of 25p in issue during the period
of 22,418,675 .
At the year end the company had no share option scheme in place and
correspondingly there is no dilutive effect.
4. INTANGIBLE ASSET
Unaudited
2001
£'000
At 1st July 2000 -
Brand acquired during the year 29,577
At 30th June 2001 29,577
5. TANGIBLE FIXED ASSETS
Long Short Fixtures & Unaudited
Freehold leasehold leasehold equipment Total
£'000 £'000 £'000 £'000 £'000
Group
Cost or valuation
At 1st July 2000 - - - - -
Acquisitions 37,450 23,772 761 1,698 63,681
Additions 1,236 2,673 - 7,147 11,056
Disposals (7,495) - (10) (1,337) (8,842)
Reclassification - (454) 454 -
Revaluation 4,809 2,055 - - 6,864
At 30th June 2001 36,000 28,500 297 7,962 72,759
Depreciation
At 1st July 2000 - - - - -
Charge for the (55) (526) (38) (1,976) (2,595)
year
Disposals - - 10 176 186
Revaluation 55 526 - - 581
At 30th June 2001 - - (28) (1,800) (1,828)
Net book value
At 30th June 2001 36,000 28,500 269 6,162 70,931
All of the Group's properties at 30th June 2001 were valued on an open market
value basis by DTZ Debenham Tie Leung, acting as external valuers. This
revealed a valuation of £64.5 million (a valuation surplus of £7.4 million)
which is reflected in the table above. The valuation was carried out in
accordance with the Appraisal and Valuation Manual published by the Royal
Institution of Chartered Surveyors. The fixtures and equipment are retained at
cost.
6. DEBTORS
Unaudited
Group
2001
Amounts falling due within one year £'000
Trade debtors 4,489
Amounts owed by fellow subsidiary undertakings 348
Other debtors 1,035
Prepayments and accrued income 1,085
6,957
Amounts falling due after more than one year
Other debtors 581
7. CREDITORS : amounts falling due within one year
Unaudited
Group
2001
£'000
Bank loans and overdrafts 19,227
Trade creditors 5,042
Amounts owed to fellow subsidiary undertakings 4,788
Other creditors including taxation and social security
Corporation tax 553
Other taxes and social security 516
Other creditors 460
Accruals and deferred income 3,915
34,501
8. CREDITORS: amounts falling due after more than one year
Unaudited
2001
£'000
Bank loans and overdrafts 15,059
Other creditors 233
15,292
Unaudited
2001
£'000
Repayable in one year:
Current portion of bank loans (note 21) 941
Repayable:
Between one and two years 1,255
Between two and five years 3,765
After more than five years 10,039
Total loans due after more than one year 15,059
Total loans and overdrafts 16,000
9. NET CASH OUTFLOW FROM OPERATING ACTIVITIES
Unaudited
2001
£'000
Total operating loss (4,941)
Depreciation 2,595
Loss on disposal of tangible fixed assets 862
Decrease in provision (20)
Increase in stock (1,028)
Increase in debtors (609)
Decrease in creditors (514)
(3,655)
10. FINANCIAL INFORMATION
The financial information set out above does not constitute the Company's
statutory accounts for the financial year ended 30th June 2001. The Statutory
accounts for 2001 will be finalised on the basis of the financial information
presented by the Directors in this preliminary announcement and will be
delivered to the registrar of companies following the Company's Annual General
Meeting.
11. DESPATCH OF ACCOUNTS
The audited accounts of the Company are expected to be sent to shareholders
during October 2001. Thereafter copies will be available from the Company
Secretary, Filex Services Limited, 179 Great Portland Street, London W1N 6LS.
Friday, 17th May 2024
COMPANIES COVERED:
Latest directors dealings
- 22 minutes ago Vertu Motors
- 34 minutes ago Brickability Group
- 39 minutes ago Abrdn Property Income Trust Limited
- 50 minutes ago M&G
- 50 minutes ago Hochschild Mining