The Brown Thomas group has reported a 10.8 per cent drop in like-for-like pretax profit to €20.53 million as the retailer bore the impact of rising rents, significant investment and losses at the BT2 offshoot in the younger luxury fashion segment.
With shoppers out in force at the four Brown Thomas department stores and 28 A Wear outlets, annual turnover rose to €228.49 million from €211.99 million in the year to January. The group's owner, Canadian businessman Galen Weston, took a dividend of €8 million last year.
Like-for-like profits excluded the impact of €1.2 million in redundancy payments after the closure of the internal accounts payable unit and a €700,000 write-off of assets. Similar figures for the previous year excluded a €2.1 million insurance payment due to a flood in 2003.
When these items were included in the figures, annual operating profit fell to €20.26 million from €26.71 million and pretax profit fell to €18.62 million from €25.11 million. The gross profit margin held steady at 45.7 per cent, Brown Thomas said.
Chief executive Dalton Philips said profits would recover this year as it takes the benefit of €29 million in capital expenditure last year and a strategic rethink at BT2, its newest brand. "You expect to reap the rewards," he said.
With the three BT2 stores in recovery mode following the integration of the buying function in the chain into the parent group, Mr Philips said the group was looking for a suitable location for a BT2 store north of the Liffey in Dublin. "There's a big opportunity on the northside. We'd like to be on the northside," he said.
"[ BT2] went from being an profitable business to being an unprofitable business. The good news this year is that it's squared away and it's come up again. It'll make a profit."
Mr Philips would not quantify the losses at BT2, but said there had been a slow start to business at its store in the Dundrum Town Centre in March last year. BT2 made the mistake of providing the same range in Blanchardstown as in its Grafton Street outlets, where profits fell. "We didn't understand the Blanchardstown market to the extent that we needed to," he said.
In the luxury market, Mr Philips was pleased with the Brown Thomas outlets in Dublin, Cork and Limerick and said the Galway store performed particularly well last year.
The mass market A Wear chain opened six stores last year, but a steep rise in rents had an impact on profits at a time when the number of competitors had increased radically.
While Brown Thomas does not break down its group accounts between individual brands, its turnover includes concession income of €17.86 million from fashion retailers who rent floor space in its stores. The addition of concessionaire sales to the turnover figure brings gross transaction value in the group to €280.67 million, up from €254.58 million.
