LONDON — Sears PLC, the U.K. retail group, said it still plans to spin off its Selfridge’s department store into a separately listed company despite a 4 percent drop in sales at the store in the first 19 weeks of the current financial year.
Sears’ shareholders are expected to vote on the plan at the company’s annual general meeting July 17. If it’s approved, Selfridge’s is expected to become a separately listed company on the London Stock Exchange on July 20.
Sears — not related to the U.S. company Sears, Roebuck — said it believes the spinoff of Selfridge’s offers the best opportunity for the retailer’s management to focus on strategy, operational needs and capital requirements. Selfridge’s is nearing completion of a major remodeling program at its 540,000-square-foot store in Oxford Street, London, and this September will open its second store, in the Trafford Center outside Manchester. It is searching for further sites for stores in other major U.K. cities.
For the year ended Jan. 31, Selfridge’s posted operating profits of $35.3 million — off 40.3 percent from $59.2 million reported a year ago — on sales of $489.5 million, off 1.7 percent from sales reported a year ago. Dollar figures are translated from the English pound at current exchange.
The store had net assets of $546.4 million as of Jan. 31 and net debt of $81.7 million, Sears said.
Selfridge’s said the drop in sales in the first 19 weeks of the current year resulted from continued disruption as a result of its remodeling program, especially in the cosmetics and beauty departments. Its fashion sales have been below target, and tourist sales continue to be adversely affected by the strength of the pound against other currencies.
The retailer warned that profits in the year to Jan. 31, 1999, will be hit by the costs of opening the Manchester store, as well as the costs associated with the demerger from Sears.
However, benefits from the remodeling of the Oxford Street store and the new Manchester store should begin to flow through in the second half of 1999 and the year 2000, it said.

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