Hunter bounceback as credit crunch losses turn to profits

Published on Tuesday 11 January 2011 21:18

Scottish entrepreneur Sir Tom Hunter has seen his trading company return to profit after suffering heavy losses during the credit crunch.

• Back in profit: Sir Tom Hunter. Picture: PA

Accounts filed for West Coast Capital (WCC) Trading - which includes clothing chain USC, the Garden Centre Group and Hunter's 27 per cent stake in online retailer Flying Brands - posted a pre-tax profit of 7.6 million in the year to 31 January, ahead of a series of recent deals.

In the past few weeks, Hunter has sold shoe shop chain Office for 150m and is believed to have netted about 30m from the surprise sale of Aberdeen-based oil services firm PSN - in which he held an 8 per cent stake - to rival Wood Group.

Hunter also rescued fashion chain Cruise out of administration in December, saving ten stores and about 300 jobs.

The surplus at WCC Trading marks a turnaround for the division, which had slashed its losses in the previous 12 months from 150m to 40m.

Hunter had been hit hard in the downturn, having invested heavily in the property market around the 2007 boom in prices.

But he has since made a series of write-offs from his investments and sold off flagging retail businesses including D2 and Qube, both of which subsequently fell into administration.

WCC Trading's turnover edged up by 3.4 per cent to 216m, while the rise in profits came through a focus on the company's bottom line.

Ewan Hunter (no relation), a spokesman for WCC, said: "We've been through some tough times but hopefully we're now coming out the other end into some positive times. Profitability is king so we've been keeping a close eye on margins."

Commenting on the financial year ending this month, he added: "USC contributed about 3.2m of earnings last year and we would expect about the same this year. Office's profitability had grown considerably by the time we sold it. The businesses are going in the right direction now."

He said Hunter was still on the look out for niche firms in the retail sector that he could buy and grow into bigger businesses.

Separate accounts filed for WCC Holdings - which manages Hunter's 12 per cent stake in department store chain House of Fraser and a range of companies including retail parks and shopping centres - also showed that the division returned to profit.

The business posted a surplus of 6.3m, compared with an 83.2m loss the previous year, which had included 87.8m of write-offs against the value of investments.Turnover edged up from 39m to 40m.

Hunter is not listed as a director of either WCC Trading or Holdings but instead is chairman of the parent company, West Coast Capital Partnership.

The partnership pumped 183.6m into WCC Holdings and 54.3m into Trading in June to "strengthen the balance sheets and pay off inter-group debt".

Under last month's Cruise deal, the Ayrshire businessman is understood to have paid about 6m for ten stores in England and Scotland, beating a rival bid for the business from JD Sports.

His spokesman said he had made the "modest investment" himself rather than through his West Coast Capital partnership.

Lloyds Banking Group had sold Cruise to business restructuring specialist Hilco earlier in December but administrators from Deloitte were called in and the chain's stores in Dundee and Livingston were closed with the loss of 18 jobs.

Hunter's sale of Office 150m in December to European private equity firm Silverfleet Capital is believed to have delivered a 900 per cent return - he bought the retailer for 15m in 2003.