Sir Tom Hunter's fashion chain pays for growth as sales edge up

A MAJOR investment and expansion programme contributed to a fall in profits at Sir Tom Hunter's USC fashion chain last year despite sales edging up in a tough trading environment.

The Kilmarnock-based company, which paid off its debts during the year after Hunter pumped in a further 8.7 million, is continuing to expand through store openings and is completing a major refurbishment programme.

The store revamp programme is partly to take advantage of fast-growing demand for its footwear range which was first introduced two years ago and had since seen "very strong growth".

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In December, the retail entrepreneur sold his shoe shop chain Office to a private equity firm for about 150m in a move which saw him make a return of nearly ten times his initial investment in the firm.

All the Scottish USC sites were refurbished during the past year - with footwear given more prominence - and work across the rest of the chain is expected to be completed this year.

Although sales for West Coast Capital (USC) were up slightly at 69.8m from 69.2m in the year to 31 January, pre-tax profits at the chain fell to 753,440 from 1.34m as interest costs and expenses rose. The fall in operating profits was less pronounced at 1.3m, down from 1.6m. External debts of 9.5m were paid off in full, the latest accounts reveal.

The company said that although market conditions continued to be difficult, trading since the year end had been in line with expectations.

During the year, USC opened four stores and yesterday signed a lease for a new outlet in Swindon. It will also open in Wakefield this weekend and in Newbury in October.

The latest openings will take the total stores in the chain up to 41, including flagship sites in Edinburgh, Glasgow, Cardiff, Liverpool, Manchester and Newcastle. Further locations are under consideration. The company said it was also continuing to invest in its online business with annual growth of around 20 per cent being seen.

The number of people employed by the group during the year rose slightly to 1,044 with employment costs increasing to 10.3m from 9.76m.

The USC business comes under the umbrella of Hunter's West Coast Capital (WCC) Trading business which also includes the Garden Centre Group and a 27 per cent stake in online retailer Flying Brands.

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Accounts released earlier this year showed WCC Trading posted a pre-tax profit of 7.6m in the year to 31 January compared with a 40m loss the previous year when a series of write-offs had hit financial performance.Turnover edged up by 3.4 per cent to 216m.

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 and sold off flagging retail businesses including D2 and Qube, both of which subsequently fell into administration. In December, he rescued fashion chain Cruise out of administration, saving ten stores and about 300 jobs.

Although Hunter is not a director of WCC Trading, he is chairman of parent company West Coast Capital Partnership. During the year the partnership pumped 54.3m into WCC Trading to strengthen its balance sheet and pay off inter-group debt.