CLOTHING company Lyle & Scott has seen its profits fall 8.5% but the owner has signalled her confidence in the long-term prospects of the brand.

Writing in the recently filed annual accounts, Sue Wright, an accountant who also runs the Birmingham-based investment business Waterlinks, pointed out the fashion and golf-wear maker is still in a strong financial position, with its net funds increasing from £1.275 million to £7.5m.

Turnover in the 12 months to March 31, 2013 was down 7.6% from £32.1m to £29.68m, with UK sales dipping from £21.35m to £19m. European turnover was down from £9.9m to £9.43m with the rest of the world rising from £869,495 to more than £1.2m.

In spite of improved margins and a reduction in operating expenses, pre-tax profits dropped from £4.7m to £4.3m. Ms Wright said changes to "sourcing and distribution channels" as well as tight control of overheads were key components in the profitable performance.

She said: "The ongoing economic challenges within both the UK and European markets continued to impact across the business."

Ms Wright outlined in the accounts that Lyle & Scott will be making a sustained marketing push in 2014 around its Scottish heritage and golf history as its celebrates its 140th anniversary.

The brand was founded in 1874 by William Lyle and Walter Scott who set up a factory in Hawick to make underwear. It moved into clothing in 1926.

Ms Wright said: "The authenticity of this message is finding increasing support, with a loyal expanding global customer base, and we remain committed to our strategy of profitable growth through multi-channel activity and clear product segmentation."

A flagship retail store was opened on Carnaby Street in London earlier this year with Ms Wright stating the company wants to add further stores in the future. She said: "[We] remain committed to increasing our retail presence providing a controlled environment to showcase product and brand via concessions and shop in shops within premium multiple retailers.

"With new partners in key markets around the world we are setting foundations of our on-going profitable growth and we remain confident in the long term appeal of the brand."

There was no dividend paid compared to almost £3m in the prior year while Ms Watson again drew no salary. Average staff numbers were down from 119 to 115 although employee costs increased from £4.5m to more than £4.6m. The accounts show Lyle & Scott made around £7.4m of purchases from companies controlled by Waterlinks, which was down from £11m.

Lyle & Scott's golf wear has been worn by major championship winners such as Greg Norman, Tony Jacklin and Gary Player as well as being popular among celebrities who are fans of the sport such as Ronnie Corbett and Sean Connery. The brand has gained a much younger following in recent years, being sported by musicians including Vampire Weekend and Arctic Monkeys as well as actors.

According to its website, Lyle & Scott still makes its lambswool jumpers in Hawick.