Mild winter and bad debt dents Regatta’s profits

RISOL Imports, parent company of outdoor clothing business Regatta, has reported a 50% fall in profits despite a surge in sales.

The Manchester company, owned and run by brother and sister Keith and Joanne Black said a mild winter in 2011/12 had left it with too much stock which had dented the performance, along with one-off items caused by a bad debt and warehouse reorganisation.

In the year to the end of January this year, group turnover rose 10.6% to £119.9m, but profits slumped from £11.9m, to £5.4m.

Regatta, which this year won a prestigious Queen’s Award for export, sells goods in more than 40 countries. The company has sales offices in France, Belgium, Ireland, Germany, Holland, Spain, Poland, Italy, Finland, Czech Republic and Israel.

At the year end the group employed more than 530, although 55 jobs are set to be lost in the coming months as a result of a restructuring of the warehouse operations.

After shareholders shared £10m in dividends during 2010/11, no dividend payments were made in the last year.

In a review of the business, finance director Martyn Ifould said: “In spite of tough trading conditions the group continued to grow and develop during the year, however profitability was reduced.

“The weather is a significant factor affecting sales of outdoor clothing and it was unfavourable for the business for most of the year under review. The early part of the year was unseasonably warm and most of Europe experienced the mildest winter on record up to January 2012.”

Mr Ifould said sales would have been higher still, but for the bad weather – which caused higher stocks to be held at the end of the year – a new strategy for reducing stock is now being implemented.

Looking ahead, he added: “Creating great product is at the heart of the business and it is well-positioned to deliver improved results through 2012 where, in the first half of the year, the record wet weather has boosted UK sales… Whilst the nature of the weather in the key winter months, will as ever, be an important factor affecting the results for the coming year, the board is confident that this current year will deliver increased profitability.”