The fashion group Alexon has announced a profits warning and is considering a takeover or new share issue.
Alexon, the struggling women’s fashion group whose brands include Ann Harvey, Dash and Kaliko, issued a profits warning and said it is considering takeover approaches or a new share issue.
The company said it was in talks with more than one party about forging a deal that could see it taken private and de-listed, but that no firm proposal had been made.
“The board confirms that it continues to actively explore a number of options for amore appropriate capital structure,” the firm said in a statement Monday. “One of the options under review is a possible offer for the issued share capital of the company.”
The shares tumbled 23% to 5.4p, leaving the group valued at just under £8m. Following speculation at the weekend about its financial situation, Alexon warned that like-for-like sales were down 9% during August. This was a deterioration on the first half, when like for like sales for the six months to July were slightly positive, up 0.7%, although total sales were down 8% as Alexon continued to slow its opening programme to conserve cash.The company said: “Although this trend is improving, with sales in the last week of August down 1% on a like for like basis, tThe trading environment and outlook remains very tough. Accordingly, having undertaken a re-forecasting exercise, the board now expects the group’s performance for the year to be well below its previous expectations.”
Last year, Alexon raised £18.5m from investors in a share issue, and renegotiated its borrowings with Barclays after nearly breaching banking covenants. It has net debt of £8m and faces repayments next year. Its turnover in the year to the end of January was £135.9m, down from £153.4m the year before, and the company made a pre-tax profit from continuing operations, before exceptional items of £800,000, compared with a £900,000 loss the year before.
In December, Alexon was the first British retailer to issue a snow-related profits warning, claiming its elderly clientele had been snowed off the high street.
The retail veteran David Adams was appointed chairman this April. The former House of Fraser finance director, who is also on the boards of Halfords and JJB Sports, told shareholders in July that Alexon was making progress with its turnaround but “challenging trading conditions” had impacted performance, forcing it to look at ways to reduce debt.
Online income continues to grow, with sales up 118% at the half year, representing 8% of the mix. The Kaliko and Alexon brands achieved double-digit like-for-like sales growth.
“The latest profit warning and the fact that the company continues to explore its options, months after first announcing its intention to do so, leaves long-suffering shareholders looking at a crumbling margin-recovery story,” according to a note from broker Panmure Gordon. “Perhaps an offer will be forthcoming, but this is by no means guaranteed and it all looks a little grim.”
