All Saints plunged to a £68.8m pre-tax loss last year as new owner Lion Capital invested in its turnaround which it said is starting to bear fruit.

The fashion chain, which private equity firm Lion Capital bought in May last year, posted the plunge for the year ended January 29, up from an £88,000 loss the year before.

The loss includes “significant exceptional costs” to stabilise the business, according to Lion Capital partner Lyndon Lea, including a £20.4m depreciation charge and a £18.2m payment relating to stock and fixed assets.

The retailer made an £9.1m EBITDA loss, before exceptional items, against a £21.4m profit the year previously.

Since the year end, Lea said the retailer’s operating performance had “improved markedly”. He said its first half results were “ahead of plan” and its autumn 2012 launch had driven like-for-like sales growth across all regions and product categories.

Lea said: “Our key objective for the year was to put into effect the changes needed to stabilise the business. As expected, some of these changes incurred significant exceptional costs but this has helped to sustain the significant improvement in All Saints’ financial position since the refinancing of the business.”

Sales increased 6% to £220.5m in the year, however gross margin was down from 62.6% to 53.4% as it cleared “substantial surplus stocks” which had built up over a number of years.

Along with paying off the retailer’s debt, Lion Capital also invested a “substantial cash war chest” to fund its future expansion.

It has also overhauled its management team including hiring ex Burberry retail and digital boss William Kim as chief executive. It has also added directors to lead ecommerce, supply chain, retail buying and merchandising and IT.

Lea said: “We have great confidence in William Kim and the management team’s plans to grow AllSaints’ international and digital footprint now that the company has a solid platform upon which to build.”