Edinburgh Woollen Mill warms up the high street with record profits

Edinburgh Woollen Mill saw record profits despite spending millions to buy the collapsed Peacocks chain
Edinburgh Woollen Mill saw record profits despite spending millions to buy the collapsed Peacocks chain
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EDINBURGH Woollen Mill (EWM), the Scottish retail group which stepped in to save part of the collapsed Peacocks chain earlier this year, has defied the high street gloom to post record profits.

Its latest accounts also revealed that it spent some £34.7 million on buying the Peacocks and Jane Norman chains from administrators during the year although what it paid for each business was not detailed.

The Dumfriesshire-based company, which has expanded aggressively in recent years, said its performance during the last financial year had been “not an insignificant achievement” given the challenges impacting on the retail sector.

The company pointed to the pressure on input costs which it described as “dramatic” and said actions had to be taken during the year to compensate for cost increases.
Accounts for the EWM Group, which also includes figures for its Edinburgh Woollen Mill retail business, highlighted the support it had from its bankers Barclays and Santander which provided “more than adequate funding facilities” which enable it make business decisions.

“Despite the challenging trading environment, the EWM group continues to build a strong position in each of the markets in which it operates,” said the directors’ report to the accounts.

Turnover of the group, which also includes the Ponden Mill home and Proquip golf clothing business, rose by 25.8 per cent to £245.7m in the year to 25 February partly due to the acquisitions of Jane Norman and Peacocks, but also through openings of Edinburgh Woollen Mill stores.

Group pre-tax profits rose by 43 per cent to £20.2m from £12.5m. Staff numbers increased by more than 600 to just under 5,000.

Like for like sales at the 
Edinburgh Woollen Mill’s retail business, which is also behind the Hector Russell highland wear brand, dipped although turnover edged up to £161.7m from £160.3m thanks to 18 store openings to take its portfolio up to 372.

Tight cost control saw profits increase to £24.8m from £21.2m in the year to 25 February.

EWM acquired part of Peacocks just before the financial year end for an undisclosed sum.

EWM had been a surprise bidder for Peacocks, a private equity-backed company which collapsed into administration under its £700m debt mountain in the biggest retail failure since Woolworths.

At the time, Philip Day, EWM’s chairman and chief executive, said a considerable amount of work would be needed over the next few months to “stabilise the situation, turn this business around, get the supply chain moving again and excite the customers with great products”.

Day staged a £67.5m management buy-out of EWM in 2002 and the group is now owned by him and his family. The company’s Edinburgh Woollen Mill arm includes a high street division with stores across the UK and Ireland and a tourist division which operates in key locations including Crieff, Fort William, Oban and Pitlochry.

It also has a “destination” division which operates from larger sites which enjoy significant number of coach party visitors from the UK and abroad.