La Senza halts expansion as losses spiral

Embattled shareholders in La Senza, the lingerie group which came to the market last year, suffered a fresh blow yesterday when the struggling retailer announced mounting losses and said the illustrative projections set out in its listing prospectus "should be disregarded".

Shares in La Senza, which were priced at 150p when the company was floated on the Alternative Investment Market last summer, lost 41 per cent of their value, closing 26.5p lower at 38.5p.

The company is halting its aggressive store opening programme and will persist instead with its existing 52 outlets. Reporting pre-tax losses of pounds 2.9m in the six months to 2 August compared to a pounds 1.6m loss in the same period last year, the company said spiralling property prices had made many projected openings uneconomic. In addition, planning and buying difficulties have led to inconsistency of supply and "an excessive reliance on low-priced merchandise and promotional activity."

In its flotation prospectus, La Senza was forecast to make pre-tax profits of pounds 2.3m this year. These figures had already been scaled back following a profits warning earlier this year. The group is now expected to make losses in excess of the pounds 1.5m recorded in the last full year.

Nuala McGourty, the former retail director, will replace the 30-year- old Joel Teitelbaum as managing director. Mr Teitelbaum, the son of the chairman, Irving Teitelbaum, will remain on the board with responsibility for the property portfolio.

Four senior managers have left the group as a result of the recent problems. However, Laurence Lewin, the deputy chairman said institutional investors had not been pushing for further boardroom changes. "Nobody has turned to me and said `on yer bike'," he said. He added that the company would "hopefully now get its act together". He said he still believed that the La Senza trading format could work in the UK.

Williams de Broe, which acted as La Senza's nominated adviser during the float defended its position. Graham Lewinstein said: "We thought it was properly priced and we examined the company's projections in a lot of detail. We followed the performance of the La Senza operation in Canada and everything seemed to make sense."

Adding that La Senza is "not a lost cause", he said the movement in the property market could not have been forecast at the time. Mr Lewin said lease costs in some locations had risen by 38 per cent in the past year. He added that the company had a list of 41 sites where the group had either been gazumped or Mr Lewin had decided that the costs were too high.

La Senza is 60 per cent owned by Suzy Shier, the Canadian group which launched the La Senza chain in Canada and now has over 12 per cent of the local lingerie market.