THE economic downturn will this year hit Brown Thomas, which yesterday reported an 11% rise in pre-exceptional pre-tax profits to about €27 million for 2007.
The company, which last year notched up exceptional profits of more than €54m from the sale of Awear said the deteriorating economy will result in weaker results this year.
Awear was the subject of a management buy out in May last year.
Turnover across the four Brown Thomas stores and three BT2 stores increased by 8.3% to €271.5m in 2007. Operating profit jumped 15% to €23.1m.
Chief executive of the Brown Thomas group, Nigel Blow, said the slide in consumer confidence, the impact of the credit crunch and the deterioration in the economy has combined to create a more difficult retail environment for the group. “Whilst we have yet to trade the busiest period of our year, the group is not forecasting results in 2008 to be as strong as 2007,” he said.
He added that the focus during this “turbulent period” is to maintain an “aggressive focus on cost control across all areas”.
Mr Blow said the results for 2007 reflect the combination of improved margins in the business and tight cost control across the group.
“The group also benefited from store improvements made as a result of its ongoing capital expenditure programme in recent years,” he said. Brown Thomas invested about €9m €in store refurbishment last year, most of which related to improvements made in its Cork and Galway stores. “Growth in turnover was also buoyed by the impact of maturing SSIAs and strong consumer confidence,” said Mr Blow.
The performance in 2007 incorporates trading in Awear for three months before it was sold.
Total capital expenditure in the group for 2008 will be around €19.5m.
“The Brown Thomas group has a very strong balance sheet and will continue to be cash generative.
“We believe Brown Thomas is well positioned to take advantage of the opportunities that arise from the eventual upturn in the economy and consumer sentiment,” added Mr Blow.
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