BROOKS BROS. OPERATING NET OFF 71.3% IN HALF
Byline: James Fallon
LONDON — Brooks Bros. hit the wall in the first half ended Sept. 30, with a 71.3 percent drop in operating profits to $1.09 million on a 9.1 percent increase in sales to $184.92 million, its parent Marks & Spencer PLC reported Tuesday.
In the year-earlier period operating profits were $3.79 million on sales of $169.47 million.
Marks & Spencer gave few details on the chain’s poor performance in the first six months. Sir Richard Greenbury, chairman of Marks & Spencer, said Brooks Bros. was “affected by the difficult trading conditions in the North American clothing market.”
The decline came despite the opening of 11 stores in the U.S. during the period. Brooks Bros. had 94 stores at the end of the first half, compared with 83 the previous year. In Japan, it had 51 stores, compared with 50 last year, a Marks & Spencer spokeswoman said.
Marks & Spencer revealed the drop at Brooks Bros. a week after William Roberti, the chain’s president and chief executive, announced his resignation. Roberti will leave his post Dec. 1.
Neither the U.K. company nor Brooks Bros. has explained the reasons for Roberti’s departure beyond saying that he was leaving the New York-based chain to “pursue other interests.” Marks & Spencer is searching for a successor.
The U.K. company hasn’t been completely satisfied with the performance of Brooks Bros. ever since it bought the chain from Campeau Corp. for $770 million in February 1988. Analysts criticized the U.K. company for overpaying for the chain, which was going for a price of about $400 million only months before the U.K. company bought it.
Marks & Spencer has been unable to turn Brooks Bros. into the worldwide retailer it envisioned. Initial attempts to introduce Marks & Spencer merchandising systems and some U.K.-designed and sourced products, were unsuccessful.
Industry executives said the growth at the chain in the last few years has been at its factory outlet business, which now has 33 units, and in Japan.
Earlier this year, Greenbury indicated that in his eyes, there’s significant room for improvement at Brooks Bros. He said he would be satisfied with Brooks Bros. only when it posted an annual 10 percent return on sales.
Last year, the chain had a return on sales of 5.9 percent. In 1988 the figure was 17 percent.
Overall, Marks & Spencer reported a 14.9 percent increase in after-tax profits to $389.61 million, or 240.5 million pounds, from 209.4 million pounds in the first half. Sales rose 6.9 percent to $4.97 billion, or 3.07 billion pounds from 2.87 billion pounds.