/FIRST AND FINAL ADD -- NY015 -- HARTSTONE GROUP EARNINGS/
The board of the Hartstone Group PLC today announced record results (show in full below) for the six months ended Sept. 30, 1991:
-- Turnover increased to 92.8 million pounds sterling from 25.4 million pounds.
-- Pre-tax profits increased by over 250 percent to 8.2 million pounds from 2.3 million pounds.
-- Earnings per share up 56 percent to 8.1 pence from 5.2 pence (as adjusted).
-- Dividend per share up 50 percent to 1.875 pence from 1.25 pence.
Hartstone has achieved significant and well-balanced growth during the period. Our progress has been marked by a combination of substantial improvements in profits particularly from the North American Leathergoods Division and the further development of Hartstone's interests in Europe.
Divisional management under its chief executives Alan Cohen (European Leathergoods), John Phillips (European Hosiery and Casualwear) and Trevor Brentnall (North American Leathergoods) has been continually strengthened as the divisions have extended their scope. We have a cohesive team, with the flair and experience to develop our businesses effectively and to take advantage of our increasing presence in our chosen markets. This, coupled with such excellent results, has been achieved despite the background of continued economic recession in both the United Kingdom and the United States, our two principal markets.
The board's dividend policy is to reflect both progress and prospects for the full year, particularly in view of the bias of our current businesses towards the second half of our financial year.
The board has declared an interim dividend of 1.875 pence per share, an increase of 50 percent. This will be paid on Jan. 10, 1992 to shareholders on the company's register on Dec. 5, 1991. The board is again giving shareholders the opportunity of taking their dividend in Hartstone shares instead of cash.
This division performed well, contributing operating profits of 2,084,000 pounds (1990: 1,845,000 pounds) on sales approximately 6 percent ahead of the comparable period. The division in the UK now has established businesses and brands at all price levels enabling it to offer the widest and most varied product range to its customers. Trading conditions during the period have been extremely difficult and have varied from company to company, although the division has continued to increase its market share. Triad Leather was exceptionally successful with sales 38 percent ahead of the comparable period. CIMA, our luxury leathergoods manufacturer, has continued to face a particularly tough time; however conditions are improving and a better second half is expected.
The division is continuing to realize the benefits of its worldwide sourcing and the volume of leathergoods sourced by the group. The maximum benefits have not yet been achieved and are expected to show operating margin improvement.
European Hosiery and Casualwear
Operating profits for the division were 829,000 pounds compared with 661,000 pounds in the comparable period. Sales of hosiery were 13 percent ahead of the comparable period last year. Significant costs have been incurred in building the brands management team and in creating a structure which is now capable of material long term growth. The full benefits from this expenditure will not be seen until 1992/93.
The Bear Brand range and packaging has been redeveloped and was relaunched successfully in September 1991. Meanwhile our UK business is the largest contract supplier of retailers' own label ladies' hosiery and is continuing to gain new contracts.
The business of Ipko-Werner (in Holland and Germany) continued to progress and the division as a whole now has cohesive sourcing arrangements in place, co-ordinated through Leeds. This will continue to produce purchasing benefits and enhanced operating margins.
Pamplemousse's sales have been materially affected by the recession, although overheads have been reduced to mitigate the impact on operating profits.
North American Leathergoods
This division performed exceptionally well, contributing operating profits of 6,390,000 pounds on sales of 53.9 million pounds, which were 35 percent ahead of the comparable period in 1990. Both Etienne Aigner and Michael Stevens, which joined the group at the start of the financial year, have settled in extremely well. An exceptionally strong performance by Michael Stevens with operating margins also moving ahead contributed mainly to the dramatic increase. Dover Handbags was acquired in June and has since been streamlined and totally integrated into Michael Stevens.
Etienne Aigner also performed well and now sources approximately 70 percent of its handbags through Michael Stevens' Hong Kong subsidiary. Etienne Aigner has continued to open retail outlet stores and plans to have 30 stores by March 31, 1992. This development has extended the company's geographical coverage, particularly onto the West Coast.
During the six months since joining the group, the management of both companies has been significantly strengthened. Within Etienne Aigner the emphasis has been mainly in marketing and design whilst at Michael Stevens, the structure underneath Michael Agresta and Stephen Jacobs has been strengthened to cope with expected future expansion.
The group has recently opened the Hartstone Centre in North London, comprising showrooms which display product from all group companies. The move will benefit both existing and potential customers and is expected to have a major impact on the perception of the group, particularly by its European customers.
The group is the world's leading distributor of leathergoods, sourcing from Europe, the Far East, South America and elsewhere. We will continue to build on our strength in sourcing.
Future Strategy and Prospects
The current business climate in the UK and U.S. remains uncertain and is not an easy one in which to operate. Hartstone is continuing to demonstrate that, with vigorous management, clear and aggressive business objectives and an increasing ability to provide its customers with reliability, quality and value for money, it can continue to build market share and profitability. The board is reviewing opportunities for continued development in Europe and elsewhere.
The second half of the year, including the Christmas season, will provide further opportunities for reinforcing our divisions and developing our new businesses.
The board is confident of continued progress.
INTERIM PROFIT STATEMENT
The unaudited results for the six months ended Sept. 30, 1991 and Sept. 30, 1990 together with the audited results for the year ended March 31, 1991 are as follows:
HARTSTONE GROUP PLC
(Pounds in thousands)
Notes Six months to Sept. 30 Year to March 31
1991 1990 1991
Turnover A 92,802 25,374 68,910
taxation A 8,171 2,257 7,357
Taxation B 2,778 723 2,265
taxation 5,393 1,534 5,092
Dividends 1,281 352 1,542
Retained profit 4,112 1,182 3,550
share C 8.1p 6.2p 15.9p
share (net) 1.875p 1.25p 3.25p
(A) Analysis of turnover and profit
Set our below are the unaudited results for the six months ended Sept. 30, 1991, together with the unaudited results for the six months ended Sept. 30, 1990.
Six months to Sept. 30
Turnover Profit Turnover Profit
(Pounds in thousands)
European leathergoods 19,100 2,084 13,450 1,845
European hosiery and
casualwear 19,815 829 11,924 661
leathergoods 53,887 6,390 -- --
Total 92,802 9,303 25,374 2,506
Interest -- 1,132 -- 249
Total 92,802 8,171 25,374 2,257
The profit column comprises the operating profits of the three divisions before interest and the group's net interest expense. Last year's figures have been restated accordingly.
The taxation charge for the period is a proportion of the anticipated charge for the full year ending March 31, 1992.
(C) Earnings per share
Earnings per share has been calculated by reference to earnings of 5,393,000 pounds (1990: 1,534,000 pounds) and a weighted average number of ordinary shares in issue of 66,460,008 (1990: 29,332,906). Earnings per share for the six months ended Sept. 30, 1990 has been adjusted to reflect the rights issue in March 1991.
The financial information set out above does not comprise full financial statements within the meaning of the Companies Act 1985. Full accounts for the year ended March 31, 1991, on which the auditors have given an unqualified report, have been delivered to the Registrar of Companies.
A report containing full details of the interim results and the chairman's statement will be sent to shareholders shortly.
-0- 11/14/91 AA NY015
/NOTE TO EDITORS: Copies of this announcement will be available (for collection only) for a period of 48 hours from the Company Announcements Office at the stock exchange and at any time from the registered office of the company at 1 Saint Andrew's Court, Thame, Oxfordshire, OX9 3GG./
/CONTACT: Stephen Barker or David Gratton of Hartstone Group, 084-426-1544; or Richard Oldworth of Buchanan Communications, 071-489-1441; or Fern Lazar or Debra Wasser of Dewe Rogerson, 212-688-6840, for Hartstone Group/
/END FIRST AND FINAL ADD/ CO: Hartstone Group PLC ST: IN: REA SU: ERN FC -- NY015A -- 4361 11/14/91 11:02 EST