AIGNER U.S. LIGHTENS PICTURE AT HARTSTONE
Byline: JAMES FALLON
LONDON — Etienne Aigner in the U.S. was a bright spot in an otherwise difficult year for its parent, The Hartstone Group PLC.
In the fiscal year ended March 31, Etienne Aigner, the U.S. footwear and accessories company, posted a 7.4 percent increase in trading profits to $14.1 million from $13.1 million a year earlier. Sales rose 2.9 percent to $113.9 million from $110.6 million.
Overall, Hartstone reported a group loss for the year of $108.9 million (71.5 million pounds) at current exchange, after taxes and exceptional charges. In the previous year, Hartstone posted a loss of 12.4 million pounds after taxes and exceptional items. Group sales, including discontinued operations, fell 1.7 percent to $538.7 million (353.9 million pounds).
The most recent loss includes exceptional charges totaling $108.9 million (71.5 million pounds) to cover restructuring costs and the loss on the sale of various operations.
At the operating level, Hartstone had profits of $17.8 million (11.7 million pounds), down 30 percent. The group has substantially restructured since May 1993 with the sale of hosiery and casualwear operations in Spain, Germany and the U.K. for a total of $73.4 million (48.2 million pounds).
Small leather goods have been Hartstone’s best performer, and it now plans to focus mainly on leather goods, although it continues to own one of Spain’s largest hosiery manufacturers, Aznar.
Discussing Etienne Aigner’s results, Hartstone noted that gross margin rose to 37.9 percent from 33.9 percent. The product line has been revamped to appeal to a younger customer, the sourcing base extended and the accessories line refocused on handbags and small leather goods. Shaun Dowling, Hartstone’s chairman, said Etienne Aigner’s future growth will come from accessories, although footwear currently is 70 percent of sales.
Etienne Aigner is stepping up the opening of freestanding outlet stores and plans to add six this year at an average capital cost of $100,000. This is expected to be recovered within a year of each store’s opening. Six more outlet stores will be added in each of the next two years. The company currently has 48 stores.
Licensing — in ties, shirts and fragrances — is expected to be extended to other products.
Hartstone also said Michael Stevens, its other U.S. operation, had an 8.3 percent drop in trading profits last year to $4.2 million on a 0.8 percent rise in sales to $120.8 million. Stevens — which does leather goods under the Michael Stevens, Valerie Barad and Sereta brands — has had a drop in sales in the first quarter of this year, following its decision to stop supplying warehouse clubs, it was noted.
Hartstone also reported plans to raise $46.1 million (30.3 million pounds) through a two-for-one rights issue, with proceeds to be used to reduce its borrowings, strengthen its balance sheet and provide working capital.
If the rights issue is not approved by shareholders, Hartstone will breach its lending agreements, the group said. It is a condition of refinancing agreements reached with its principal creditors in March that $22.8 million (15 million pounds) be repaid to them by October.
— Fairchild News Service