Austin Reed makes first loss in 30 years

AUSTIN REED, the fashion retailer, yesterday posted its first loss in more than 30 years, slashed its interim dividend and warned that trading had become even worse since Black Wednesday.

Barry Reed, the chairman and the grandson of the founder, said it was the first deficit in his 30 years as a director: 'One has to get over the embarrassment and put a brave face on it. I have a feeling we may have made a loss in the 1930s slump.'

The group, which manufactures and retails upmarket men's and women's clothing, fell from pre- tax profits of pounds 600,000 to a loss of pounds 400,000 in the six months to 8 August. In happier half-years, Austin Reed made profits of pounds 3m.

The interim dividend, payable on 1 December, was cut by one third to 2p. Disappointed investors marked the shares 5p lower to 193p.

Mr Reed blamed the general lack of confidence, especially among white-collar workers. Some unpopular styles in the spring collection may also have hit womenswear sales.

He said the 'crazy' leasehold rules were having a damaging effect. The group was having to keep open three unprofitable stores because of the even higher costs of exiting from leasehold premises.

One landlord, he said, was trying to double the rent on a store which Austin Reed had closed but was unable to find a new tenant for. He supported the attempt by Littlewoods to reform the upward-only rent system.

Group sales fell from pounds 35.6m to pounds 28.7m, partly due to the disposal in January of the Robertson knitwear business.

In the 40 stores, like-for-like sales fell by 3 per cent despite an increase in the annual advertising spend from pounds 1m to pounds 1.5m.

In the first few weeks of the second half, sales were level-pegging with last year, until Black Wednesday, when sterling was pulled out of the exchange rate mechanism. Since then, sales had worsened.

Sales in the manufacturing division fell 11 per cent. Half the fall was due to the closure of a factory, but most of the rest was caused by weaker exports. It was too early to say whether sterling's crash would boost exports.

However, the weaker pound was already bolstering royalty income from licensing the Austin Reed and Chester Barrie brand names in the US and Japan. The group has signed new licence agreements in Korea and Canada.

The Robertson disposal knocked about pounds 500,000 from trading profits. But the pounds 3.5m proceeds reduced the interest charge from pounds 1.4m to pounds 1m.