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Etam sticks to cautious approach

Paul Durman
Thursday 22 April 1993 18:02 EDT
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ETAM, the women's fashion retailer, is treating the widespread talk of economic recovery with care and intends to stick to its strategy of cautious expansion. The group said yesterday it did not expect to return to its best levels of profit this year, writes Paul Durman.

Recession has bitten into Etam's profits since it made close to pounds 17.5m in three years during the late 1980s. Yesterday it reported pre-tax profits edging 3 per cent ahead to pounds 10.9m in the year to January, disappointing earlier expectations.

Sir John Nott, the former defence secretary who is Etam's chairman, said the company was doing well from its modest step-by-step approach. He added: 'If we keep on this course, the shareholders over the medium term will benefit better than from some rather more ambitious strategy to expand the business faster. Borrowing money or gearing up . . . hugely increases the risks.'

From mid-October until early December, Etam was hit by the weakening of consumer confidence and was forced to mark down stock more heavily than usual in the run-up to Christmas, causing gross margins to fall from 8.3 to 7.8 per cent. Sales rose by 4 per cent to pounds 220.7m.

A final dividend of 5.25p increased the total by 5 per cent to 6.9p a share.

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