Retail tycoon Sir Philip Green has denied himself a dividend from his Bhs department store chain for a third year running, despite signs that the chain is beginning to reap the benefits of store upgrades.
The company reported a 3% rise in operating profits in the year to March 31, to £50m, on sales up 1.4% at £872.5m. Pre-tax profits climbed from £42.2m to £49.4m as debt interest payments fell.
As well as store revamps, the chain has also strived to improve its clothing ranges. The decline in like-for-like sales slowed to 1.5%, from 7.1% in 2005-06, while the operating margin climbed 0.1% to 5.7%.
Since March, Bhs said the market remained "competitive", with flat like-for-like sales. During the last six weeks, however, the chain has reported a 3% improvement on the same period in 2006, which Green attributed to improved weather conditions.
This year's figures are a big improvement on last year, when Bhs reported a 54% drop in operating profit to £48.5m as mistakes within womenswear hit sales and margins. Green described the 2007 performance as "a good platform to develop", adding that bank debt had fallen from £115.2m in 2006 to £61.8m. He expects the company to be debt free at Christmas.
Green said the chain is expected to spend about £100m refurbishing its stores and is only about 20% of the way through that programme. The 19 stores refurbished so far have reported total sales 12% ahead of the chain as a whole.
The tycoon said it was still too early to say if the tide has turned for the UK's retailers, who have found the going tougher of late. "It's just too early to be able to call it. We haven't seen enough of the road yet," he commented. "You need another month at least to get some sort of flavour of what it is going to be like."
Green again resisted the temptation to pay himself, or minority shareholders who include Scottish businessman Sir Tom Hunter, a bumper dividend. In 2004, Green banked about £188m in dividends from Bhs as the retail group unveiled record operating profits. Hunter, a close friend of Green and 5% co-owner of Bhs, also banked £10m from the 2004 pay-out.
"We don't need the money we're investing in the business and we continue to do that," Green said yesterday.
In a research note, City brokers Seymour Pierce said that since Green had taken back control, Bhs's product had improved "beyond all recognition" after being refocused on older core customers. "With the merchandise issue resolved and the store refurbishment programme underway, if this year doesn't turn out to be Bhs's year, then next year almost certainly will. A far cry from those who had entirely written off the business," it added.
Green, who was ranked seventh in the Sunday Times Rich List with a £4.9bn fortune, added: "I would like to thank all our staff for their hard work and our customers for their continued loyalty."
The former British Home Stores opened for the first time in Brixton, south London, in 1928. The highest price of any item sold was one shilling (5p).
It became a public company in 1931 but was in the doldrums when Green bought the group in 2000 from previous owner Storehouse. He rebranded the business Bhs, reviving sales and profits.
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