Dawson upbeat despite home furnishings losses

SCOTTISH textile firm Dawson International, in which Yorkshire textiles business Leeds Group has an interest, said today that overall trading last year was in line with expectations despite losses in its home furnishings arm.

In a trading update this morning for the six months to January 1 2011, the firm said that while losses in the home furnishings division widened due to the “significant” increase in cotton prices, the performances of both the UK and US knitwear divisions were ahead of expectations.

Dawson said that a further payment of $1.5m was received from cashmere group Inner Mongolia King Deer on January 5, which will bring the total exceptional income recognised in 2010 to $2.5m (£1.6m).

This will be offset to some extent by restructuring costs and an increase in environmental clean-up cost provisions in both the UK and the US, the company said.

Dawson International said: “Trading performance in 2011 is likely to be lower than previously expected, impacted by the significant increases in cotton and cashmere prices experienced in 2010.

“The increase in cotton prices is now well communicated in the market and it is anticipated that price increases will be accepted by our customers in 2011 allowing some recovery in margins in our home furnishings business.

“Cashmere price increases will impact on both our UK and US knitwear businesses. Of most concern is the impact on our US Knitwear business where private label customers have indicated that they will reduce their cashmere buys, leading to a significant reduction in turnover and profitability in that business.”