FRASER Hart, the Glasgow-based jewellers established by the reclusive Hill family, saw pre-tax earnings fall 26.8% to £3.7 million as increased spending on its stores more than offset rising sales.
The company saw a 5.2% rise in turnover to £64.9m in the year to December 31 as store openings in Stratford and Newbury helped to boost the top line.
The company's directors said in their report: "In light of the difficult economic conditions being experienced both nationally and internationally, the results for the year are relatively pleasing. Like-for-like sales were up on 2010."
The firm said profits were hit by the costs of improving its store estate. A change in its relationships with branded product providers also hit profits, although Fraser Hart said this should assist future growth.
"In spite of the tough economic conditions the company will continue to seek increased market share through a combination of new stores, upgrading of existing stores, new and enhanced product offerings, competitive pricing and effective marketing," the company said.
Fraser Hart began trading in 1936 when Fred Hill, the founder, set up a retail jewellery shop in Glasgow.
Four of the company's 37 shops are situated in the city's Argyll Arcade. It also has outlets in Stirling and Edinburgh.
In 2007 the Hill family sold the company for what was thought to be a substantial eight-figure sum to privately owned Anthony Nicholas Group of Ireland.
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