Beales has secured an asset-based refinancing with Burdale after it fell into the red as like-for-likes dropped 5.6% last year.
Pre-tax losses after exceptional items fell to £5.8m in the 53 weeks to November 3, against a £500,000 profit the previous year. However, the department store racked up £2.1m in exceptional charges due to restructuring and impairment.
The retailer, which amended and extended its revolving credit facility in June last year, refinanced its debt last month through a deal with asset backed lender Burdale. It said softer than expected trading in the second half of its last financial year put it in danger of breaking its covenants.
The department store said the refinancing would enable it to look at “key strategic expenditure projects”.
Beales put the 5.6% like-for-likes drop down to the fall-off in the electricals market, with revenue in the category plummeting by 38.3% to £2.6m over the year. It has made the decision to pull out of TV and audio in the majority of its stores.
Beales chief executive Tony Brown said: “We have seen big ticket items such as electrical and furniture become more aggressively promoted across the retail sector. Quite simply it is very difficult to accurately forecast consumers’ attitude to retail spending set against a backdrop of increasing media speculation on the high street that continues to paint a bleak future, the overall UK economic conditions and the possible impact of further financial contagion.
“We will therefore focus our attention on what we can control. We will continue to monitor our customers’ reaction to any changes and adjust our trading strategy accordingly.”
Brown leaves the department store at the end of the week. He is understood to be taking on the position of managing director of value chain Peacocks but Brown would not be drawn on where he was going next. Interim financial director Michael Hitchcock will take over the reins at Beales.
Despite the like-for-like decline, gross sales, including concessions and VAT, jumped 23.6% to £136m due to the first full-year contribution from the 19 Anglia Regional Co-operative Society stores it acquired in 2011.
Beales chairman Keith Edelman said the department store had ended the year in a “far stronger position”, which it has achieved through reducing its cost base, launching its loyalty programme, exiting its store card and introducing new product ranges and concessions.