Sales, excluding VAT and concessions, also slid 5.5 per cent to£32.4 million during the period. The group said the retail environment continues to be very challenging. 'Competition remains intense and factors such as higher interest rates and taxation have made consumers more cautious about spending,' the retailer added. At present it is seeking to acquire or merge with other businesses, at the right price.
However, cosmetics performance was strong and there were some positive returns from other product categories. In addition, the retailer will begin sourcing some of its homewares direct from the Far East from next year to enhance margins.
Beales chairman Mike Killingley said: 'We still believe that our trading strategy is appropriate for our target market, but in response to these trading conditions we have made a number of further modifications and enhancements to it. These include a critical review of the balance of our basic stock assortment and an increase in advertising spend and our monthly promotions, while retaining our focus on maintaining gross margins.'
He added: 'Unless there is a significant increase in sales during the rest of the financial year, we expect the group will make a loss for the 53-week period ending November 3. We see no immediate evidence of an improvement in the trading environment for department stores such as Beales.'
In the first six weeks of the second half to June 9, sales were down 0.4 per cent and like-for-likes declined 4.4 per cent.
Seymour Pierce analyst Richard Ratner said: 'Despite an excellent chief executive, the company is sub-scale and is still paying for the underinvestment of the previous regime.' With regards to a merger, he added: 'The problem is the lack of likely partners, because it has been up for grabs for some time. There are a few attractive stores in the portfolio, but equally some pretty poor ones and a pension deficit of£5.2 million. [It] could eventually die without a bid.'
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