M&Co reports first loss but predicts return to profit
High street fashion retailer M&Co has reported its first operating loss in around 50 years of trading although it is predicting a return to profit as it looks to expand in the Middle East and Russia.
In the year to 24 February 2012, M&Co made a pre-tax loss of £8.6 million compared to a profit of £11.5 million in the prior year. The operating loss was £5 million against a £14.7 million profit previously while turnover dropped 7% to £173.3 million.
The privately-owned company, which operates almost 300 stores, said that sales had been impacted by uncertainties in the economy and unseasonable weather. In addition, some initial errors in product selection meant that M&Co was forced to discount heavily to clear stock.
M&Co closed twelve unprofitable stores in the year. However, it plans to open 30 new stores in the Middle East in conjunction with franchise partner LIWA Trading Enetrprises. This follows the opening three outlets in the United Arab Emirates in the past year. The company is also looking to open stores in Russia where sales already account for 9% of orders on M&Co’s website.
Chairman Ian McGeoch said: "Our 2011-12 results were very disappointing. In our 50 year trading history we have never before made an operating loss, although earnings before interest, tax, depreciation and amortisation were positive at £4.6 million."
The company said there had been a good reaction to its new Autumn/Winter collection which had seen a rise in like-for-like sales.
McGeoch added: "MandCo.com continues to grow in the UK and internationally and multi-channel trading remains an integral part of our business strategy.
"Current trading has been challenging but much better in the autumn winter season, and we expect to see a return to profit despite the incredibly poor summer weather, which had a significant effect on sales. We remain positive for a much better overall result which we credit to the much improved product range as a result of a buying restructure."
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