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Ortak proves to be jewel of a business

Alistair Gray, the managing director of Scottish jewellery maker and retailer Ortak, confessed that he may have been over-zealous during the turmoil of the recession last year and that he was now planning to award his 160 staff pay rises over the next few weeks.

In one of the rare tales of success to come out of the deepest economic slump since the 1930s, Gray also told The Herald that underlying profits at the Kirkwall, Orkney-based business came in at £575,000 for the year to the end of January 2010, compared with £202,000 the year before.

Gray, whose father Malcolm founded Ortak in 1967, was in Glasgow yesterday after the official launch of its newest outlet, re-located from the city’s Argyle Street store into the new-look St Enoch Centre in the city.

Ortak will not file its annual accounts with Companies House for several months, but gave The Herald a preview.

In a sideroom in Sloans Bar and Restaurant, across Argyle Street from the celebrations of the store opening, a gin and tonic in his hand, Gray revealed that revenues for the year had climbed 5.3% to £7.6m, compared with £7.2m last time.

Affable and exuberant after the store launch – and clearly pleased with the fact his property agent had managed to knock around 20% off the St Enoch Centre rent, he said: “Given the trading environment, I’m pleasantly surprised at how well we’ve done. After all, jewellery isn’t a necessity. It’s a luxury.

“In the last quarter of 2008, just after Lehman Brothers collapsed, things were looking awful, and by this time last year we were in unknown territory.

“We did what any prudent business would do. We battened down the hatches and began cutting costs. Then waited for things to get bloody awful.

“But things weren’t as bad as we anticipated. In fact, between January 2009 and January 2010, our retail sales grew 10.2%.”

The company also expanded during the period. In October, Ortak invested £130,000 in opening a new outlet in Stirling, increasing the size of its retail portfolio to 15 stores. Some £200,000 was invested re-locating to the St Enoch Centre.

Gray said retail sales now accounted for 82% of total revenues, compared with 78% the year before. The remainder is generated by trade sales to jewellers in the UK and the US.

Asked about the cost cuts, Gray said: “We started at the top and took out a sales director, but there were no other job losses. In fact, we increased staff levels because we added stores.

“But there were numerous other cuts and efficiencies, including a pay freeze among our staff. We were targeting £500,000 of cuts and ended up removing £587,000. In fact, we probably could have got away with £300,000 of cost savings.

“We’re now conducting a review and we plan to lift the pay freeze.”

Asked what size of pay rises he had planned for his staff this year, he said: “We have a full company meeting with all staff in three weeks, so I would rather keep the rises under wraps.”

Gray also said he expects to open Ortak’s sixteenth shop later in the year, but said he had “no specific site in mind” yet.

He projected the company would increase sales by 5.7% this year, driving turnover to around £8.1m and that profits would also rise.

He said the forecasts had “been predicated on a slowly improving economic position and are cautious”, but added he was “distinctly underwhelmed” by news that the UK had exited recession in the fourth quarter with growth of just 0.3%.

“Conditions are still challenging, but we believe customers will reward businesses that are true to their values,” he said.

“We will grow by differentiating ourselves by our design. We are not only lifting the pay freeze, but are also adding an extra designer to our team.

“We must be well-positioned to take advantage of the recovery when it comes.”

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