Fashion group Alexon has returned to full-year profitability as a result of successful restructuring agreements on loss-making shop leases and more focus on cutting operating costs.
The retailer, which operates chains such as Eastex and Ann Harvey, made a pre-tax profit from continuing operations of £100,000 after exceptionals for the 12 months to January 29, against a loss of £14.3m the previous year.
Alexon reported that progress was being made on its turnaround having exited 51 loss-making leases, saving £6.6m annually.
Chief executive Jane McNally said: “Refinancing the onerous property situation definitely helped the return to profitability. We have also been very efficient around our cost base and have introduced things like flexible working hours for our staff to keep costs down.”
Alexon has also renegotiated its banking facilities and covenants with Barclays, including an extra £2.5m one-year loan facility until the end of April 2012 and deferral of a £1.5m repayment due this July.
Despite the return to profit, turnover fell from £153.4m to £135.9m and like-for-likes slipped 3.4%.
McNally said that all brands were performing well with the exception of petite clothing brand Minuet and casual brand Dash. Rising cotton prices had particularly affected Dash because almost the entire range is 100% cotton, she said.
Minuet was undermined by six months of instability in its management team, which has been rectified.
In December last year Alexon issued a profit warning after the snow hit peak sales, particularly at the Eastex brand, which targets an older customer base. However, McNally said trading since the year end had been encouraging and “broadly in line with management expectations” and that new collections “have been well received by our host store partners”.
In the past year Alexon refitted 51 concessions and stores and online sales soared 144%. It plans to overhaul another four stores this financial year and has a target of refitting 40 to 100 concessions a year.
Alexon has named David Adams, who was already a non-executive director, as its new chairman. He will succeed Richard Handover from the end of May. Adams is also chairman of camera specialist Jessops and was previously deputy chief executive and group finance director at House of Fraser.
House broker Investec welcomed Alexon’s improvements but noted: “Management acknowledges that ‘to secure and accelerate the turnaround plan’ it is reviewing its options with regards to its capital structure.”