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Edinburgh Woollen Mill defying gloom

THE Edinburgh Woollen Mill (EWM) has defied the gloom on the high street to report a near 62% hike in pre-tax profit from £12.5 million to £20.2m.

HAT'LL DO NICELY: The company reported a near 62% rise in pre-tax profit as its clothes continued to sell well.
HAT'LL DO NICELY: The company reported a near 62% rise in pre-tax profit as its clothes continued to sell well.

Accounts filed for the Edinburgh Woollen Mill (Group) – which includes EWM, highland wear firm Hector Russell, fashion retailer Jane Norman, home textile arm Ponden Home and golf clothing arm Proquip – show it saw a 25% increase in turnover from £195.8m to £245.7m in the 12 months to February 25, 2012.

Of that, £216.3m came from the sale of clothing and gifts, up from £162.4m, with home textiles sales dipping to £29.4m from £33.4m.

The company's results appear to vindicate owner Philip Day's strategy to provide a broad mix of offerings to a wide age range of potential customers.

In notes to the accounts the retailer, based at Langholm in the Scottish Borders, said: "The group achieved an acceptable financial performance over the past year which, given the many challenges impacting retail at this time, is not an insignificant achievement."

Having bought part of the Jane Norman business from insolvency in June 2011, the EWM Group then acquired 338 Peacocks fashion stores, 57 concessions and three distribution centres from administrators on February 22 this year.

The financial statements show EWM Group paid a net total of almost £34m to seal those deals.

On the completion of the Peacock's deal a credit facility of £50m was opened which is due to be paid back in February 2015. As well as that a liability for a £10m bank loan, due for repayment in June 2018, was a condition of the Jane Norman purchase.

Overall during the financial year the number of EWM stores increased from 354 to 372. Ponden Mill's estate dropped from 100 to 89, although it has concessions in 25 EWM shops.

Jane Norman, which started from 33 sites, was operating from 154 locations at the year end including concessions.

EWM Group, which also runs tourist attractions such as the Scottish Deer Centre in Fife and the Scottish Wool Centre at Aberfoyle, Stirlingshire, said it had achieved the strong results in spite of a weaker pound, constrained consumer spending, and higher prices for fuel, cotton and wool.

The group said it was working on the expansion of the EWM high street presence, re-opening Peacocks stores closed through administration and improving the supply chain and product offering at Jane Norman.

The average number of people employed across the group was 4955, up from 4341, with staff costs rising from £47.3m to £50.4m.

Net debt increased from £11.2m to £17.6m.

EWM was founded in 1946 by Drew Stevenson as a yarn dyeing business before expanding into retail in 1970, then growing under the ownership of Grampian Holdings.

Mr Day led a management buy-in of EWM during 2001 supported by private equity firm Rutland Fund Management.

The Cumbria based businessman then took full control the following year as Royal Bank of Scotland backed his bid to buy out Rutland.

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