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RATNERS GROUP PLC ANNOUNCES RESULTS FOR THE 52 WEEKS ENDED FEB. 1, 1992

RATNERS GROUP PLC ANNOUNCES RESULTS FOR THE 52 WEEKS ENDED FEB. 1, 1992
 NEW YORK, Aug. 21 /PRNewswire/ -- Ratners Group (NASDAQ: RATNY), today announced full year results for the period ended Feb. 1, 1992:
 Operating profit 1.4 million pounds ($2.5 million) (before other income/exceptionals) |1991: 134.2 million pounds ($240.3 million)~.
 Exceptional items 98.0 million pounds ($175.4 million) |1991: 2.0 million pounds ($3.6 million)~.
 Loss before tax 122.3 million pounds ($218.9 million) |1991: profit 112.1 million pounds ($200.6 million)~.
 No final dividend.
 New facilities agreement with lenders in place.
 Business review completed and being implemented.
 Appointment of David Wellings of Cadbury Schweppes plc as a non- executive director.
 /Note: The following information contains extracts from the audited accounts of the Group which are about to be posted to shareholders. (see note 7)/
 /Note: Amounts in pounds Sterling have been converted at the Jan. 31, 1992 exchange rate of 1 pound equals $1.79./
 RATNERS GROUP PLC
 PRELIMINARY ANNOUNCEMENT OF RESULTS
 FOR THE 52 WEEKS ENDED FEBRUARY 1, 1992
 Extract from Chairman's Statement
 In this, my first Chairman's Statement, I have to report that last year's results showed a significant deterioration. Group operating profit declined from 134.2 million pounds ($240.3 million) in 1990/91 to 1.4 million pounds ($2.5 million) in 1991/92. Interest charges amounted to 26.8 million pounds ($47.9 million) |1990/91: 22.2 million pounds ($39.7 million)~. In addition there were exceptional charges of 98.0 million pounds ($175.4 million) |1990/91: 2.0 million pounds ($3.6 million)~ relating mainly to reorganization and rationalization measures which have already taken place or are planned over the next three years. Consequently, profit before tax fell from 112.1 million pounds ($200.6 million) to a loss of 122.3 million pounds ($219.0 million). The Group's net borrowings at the year end were 223.2 million pounds ($399.6 million) |1990/91: 190.0 million pounds ($340.0 million)~. Your Board is not recommending a final dividend on the ordinary shares. Furthermore, as announced on Jan. 20, 1992, dividend payments to preference shareholders have been suspended.
 The principal reason for the deterioration in the Group's results was the severe effect of the recession on consumer spending both in the UK and the US. Although the jewelry sector had shown resilience to the recession which had been affecting other trades for some time, trading conditions worsened sharply in the second half of the year. The downturn was particularly marked in the crucial Christmas trading period when Group sales were down 15 percent on the previous year. The effect of the sales decrease was exacerbated by a substantial erosion in margins as the Group sought to maintain sales levels through higher promotional activity and aggressive discounting over the Christmas period. Controllable costs were tightly managed throughout the business, but substantial increases took place in UK shop rents and rates. Adverse publicity following the Institute of Directors' Conference in April 1991 contributed to the particularly poor performance of the 250 shop Ratners chain.
 Despite these disappointing results, I consider the Group's businesses to be fundamentally sound. The Group has a strong position as the leading UK jewelry retailer and is also the second largest jewelry retailer in the US, where its major competitor has filed for protection from its creditors under Chapter 11 of the US bankruptcy code. The Group has an unrivaled portfolio of well-situated stores, substantial buying benefits from economies of scale and its chains have high brand recognition. However, 1991 demonstrated that the Group had become too dependent on a sales-led strategy which, although very successful in the 1980's, was inappropriate in the difficult economic circumstances of last year.
 On my appointment as Chairman in January of 1992, I initiated, with the assistance of external consultants, a comprehensive review of the Group's businesses to identify actions required to restore profitability and to conserve cash. This review has been completed and steps have already been taken to implement many of its findings.
 In the UK, the Group's jewelry operations will be refocused with each chain's market position, product range and store image being clearly differentiated. Margins are being increased through a combination of improvements in buying and sourcing of merchandise, changes to the product mix, price increases and tight control of promotional activity and discounting. Product ranges are being rationalized to improve stock turn and permit more attractive window displays. Greater attention is being given to staff training and customer service. The store portfolio will be rationalized over the next three years to reduce geographic overlap and eliminate loss making branches. It is planned to close approximately 180 stores out of a total of 880 outlets.
 In the US, it was concluded that although the present strategy is essentially robust and the market positioning is broadly correct, there were opportunities to make significant improvements in operating performance. These include refining the marketing strategy to place more emphasis on service and quality, reducing discretionary price discounting and rationalizing the merchandise ranges to improve stock turn. A review of individual store profitability confirmed that, through its acquisition policy, the Group had become over-represented in a number of locations and during the next three years approximately 150 stores will be closed.
 A root and branch review of costs has been undertaken throughout the Group. In the UK, significant cost savings at branch and administrative levels have already been achieved and further reductions are planned. In the US, measures taken will result in a reduction of over 1,000 staff, as well as savings in central expenses including advertising and bad debts. Actions are also being taken to build on the commendable reduction in working capital achieved in 1991/92.
 The actions emanating from the strategic review and cost reduction exercise should enable the Group to improve trading performance against an outlook of much slower growth in consumer spending. However, as announced on May 13, 1992, the restructuring plans will involve substantial costs over a three year period, which have been included in the exceptional charge of 98.0 million pounds ($175.4 million) in the profit and loss account.
 Against this background, your Board has been in discussions with its lenders who have been supportive and confirmed their agreement to existing facilities remaining in place until June 30, 1993 when the situation will be reviewed.
 Since the end of the year, Watches of Switzerland, which had limited compatibility with the rest of the Group's businesses, has been sold to Asprey plc for approximately 23 million pounds (approximately $41 million).
 Trading conditions remain difficult in both the UK and the US and sales to date are below last year's levels with the timing of the economic recovery still in doubt in both markets. Although there may be some recovery in consumer confidence before the all important Christmas trading period, the Group does not intend to rely on this and will manage the business accordingly.
 On Feb. 10, 1992, Victor Ratner resigned from the Board. Masarrat Hussain and Sir Victor Garland will be retiring at the annual general meeting. On behalf of the Board, I would like to thank them all for their contribution to the development of the Group and, in particular, Masarrat Hussain who has given over 31 years of valuable service. Two new non-executive appointments have been made, Lawrence Ziman, a senior partner of solicitors Nabarro Nathanson, in February 1992, and David Wellings, an executive director of Cadbury Schweppes plc, in August 1992. I am delighted to welcome them both to the Board, and I am confident that the Group will benefit from their wide experience. James McAdam Executive Chairman RATNERS GROUP PLC
 Trading Performance Review
 In the UK, following a disappointing first half year, trading worsened during the Christmas period. Christmas is of crucial importance to our business with approximately 40 percent of sales and the majority of profit made in November and December. Sales in November were substantially below expectations and it was decided to stimulate demand by a major price promotion. The first weekend promotion at the end of November resulted in a significant increase in sales. Subsequently, trading continued at a very disappointing level and therefore the promotions were repeated on the two following weekends. The impact of these promotions was lessened because other retailers also launched similar sales. Thus, in spite of the heavy discounting, jewelry sales in the six weeks before Christmas were 15 percent below those of the same period in 1990.
 For the full year, UK sales excluding Salisburys, were 13 percent down on the previous year (15 percent down on a like for like store comparison). Sales in H. Samuel, Ratners and Ernest Jones were 10 percent, 21 percent and 8 percent down respectively. The sales decrease on a like for like store basis was marginally greater. The Ratners performance undoubtedly reflects inter alia the effect of adverse press publicity emanating from the Institute of Directors' speech earlier in the year. Salisburys' sales were 3 percent down on the previous year, albeit at the cost of heavy discounting which substantially reduced profits.
 US sales were 8 percent down for the year (9 percent down on a like for like store comparison), although at the half year stage they had been 2 percent ahead. However, during the last two months of 1991, the US Group suffered a sharp reversal with like for like sales during this period 17 percent down. These figures reflect the very difficult trading conditions over Christmas.
 For the year as a whole, excluding Kay, sales were 1 percent down and margins declined on account of specific sale events and the introduction of a voucher scheme. Kay sales were 17 percent down on the previous year. These were disappointing results. In all of the previous acquisitions, sales performance improved quickly once stores had been re-merchandised with Sterling products. In the case of Kay, it was necessary to replace an unexpectedly high percentage (about 40 percent) of the branch management who did not come up to Sterling's standards. These problems, together with the full impact of the recession, delayed the benefits of the Kay acquisition coming through as planned. Present indications are that Kay stores are showing the benefits of the management actions taken.
 London-based Ratners is the largest specialty retailer of fine jewelry and fashion accessories in the U.K. and the second largest specialty retailer of fine jewelry in the U.S. In the U.S., the company operates approximately 950 jewelry stores in 43 states and 46 leased jewelry departments under the names Sterling Jewelers, Kay Jewelers, J.B. Robinson, Belden, Hudson Goodman Jewelers, Weisfield, LeRoy's Jewelers, Osterman, Shaw's Jewelers, Friedlander's Jewelers, Roger's Jewelers, Goodman, and Black, Starr & Frost.
 RATNERS GROUP PLC
 SUMMARIZED CONSOLIDATED PROFIT & LOSS ACCOUNT
 FOR THE 52 WEEKS ENDED FEBRUARY 1, 1992
 52 weeks 52 weeks 52 weeks 52 weeks
 ended ended ended ended
 Notes 2/1/92 2/2/91 2/1/92 2/2/91
 000 pounds 000 pounds $000 $000
 Sales 1 1,128,634 1,113,922 2,020,255 1,993,920
 Operating profit 1,405 134,247 2,515 240,302
 Other income 1,006 2,008 1,801 3,594
 Exceptional items 2 (97,965) (2,000) (175,357) (3,580)
 (Loss)/profit before
 interest & taxation 1 (95,554) 134,255 (171,042) 240,316
 Interest payable, net (26,774) (22,198) (47,925) (39,734)
 (Loss)/profit on ordinary
 activities bef. taxation (122,328) 112,057 (218,967) 200,582
 Tax on (loss)/profit on
 ordinary activities 3 (3,622) (36,405) (6,483) (65,165)
 (Loss)/profit on ordinary
 activities after taxation (125,950) 75,652 (225,450) 135,417
 Extraordinary item --- (6,735) --- (12,056)
 (Loss)/profit attributable
 to shareholders (125,950) 68,917 (225,450) 123,361
 Dividends 4 (22,702) (44,408) (40,637) (79,490)
 Retained (loss)/profit (148,652) 24,509 (266,087) 43,871
 (Loss)/earnings per 10p
 Ordinary Share
 Basic 5 (50.4)p 25.0p (90.2 cents) 44.8 cents
 One ADR equals three 10p ordinary shares.
 Note: Amounts in U.S. dollars ($) have been converted at the Jan. 31, 1992, exchange rate of 1 pound equals $1.79.
 These statements are prepared in accordance with UK generally accepted accounting principles.
 RATNERS GROUP PLC
 SUMMARIZED CONSOLIDATED BALANCE SHEET
 AT FEBRUARY 1, 1992
 1992 1991 1992 1991
 000 pounds 000 pounds $000 $000
 Fixed assets 235,887 262,226 422,238 469,385
 Net current non-cash assets 305,291 319,562 546,471 572,016
 Stock 425,725 443,476 762,048 793,822
 Debtors 108,866 141,024 194,870 252,433
 Short term investments 18,111 37,261 32,419 66,697
 Creditors (247,411) (302,199) (442,866) (540,936)
 Net debt (223,213) (189,961) (399,551) (340,030)
 Other creditors & provisions due
 after more than one year (15,412) 5,821 (27,587) 10,420
 Total net assets 302,553 397,648 541,570 711,790
 Capital and reserves:
 Share capital 66,287 66,242 118,654 118,573
 Reserves 236,266 331,406 422,916 593,217
 Shareholders' Funds 302,553 397,648 541,570 711,790
 One ADR equals three 10p ordinary shares.
 Note: Amounts in U.S. dollars ($) have been converted at the Jan. 31, 1992 exchange rate of 1 pound equals $1.79.
 These statements are prepared in accordance with UK generally accepted accounting principles.
 NOTES
 1. Sales and (Loss)/Profit before Interest & Taxation
 1992 1991
 Loss bef. Profit bef.
 Interest Interest
 Sales and Tax Sales and Tax
 000 pounds
 U.K., Channel Islands and Eire 629,038 (93,117) 715,028 79,751
 U.S. 499,596 (2,437) 398,894 54,504
 Total 1,128,634 (95,554) 1,113,922 134,255
 1992 1991
 Loss bef. Profit bef.
 Interest Interest
 Sales and Tax Sales and Tax
 $000
 U.K., Channel Islands & Eire 1,125,978 (166,680) 1,279,900 142,754
 U.S. 894,277 (4,362) 714,020 97,562
 Total 2,020,255 (171,042) 1,993,920 240,316
 Exceptional items totalling 17,075,000 pounds ($30,564,000) which relate to the entire group have been provided in the parent company's own accounts and are thus classified as UK costs for the purpose of this note.
 2. Exceptional items
 1992 1991 1992 1991
 000 pounds 000 pounds $000 $000
 Branch rationalization
 -- fixed asset write down 18,578 299 33,255 535
 -- stock, disposal and other
 costs 28,480 1,701 50,979 3,045
 Stock write downs 7,348 --- 13,153 ---
 Employee Share Ownership Trust
 provision 10,150 --- 18,168 ---
 Permanent dimunition in freehold
 property valuation 5,000 --- 8,950 ---
 Bad debt write off on portfolio
 acquired with subsidiary
 undertaking 9,300 --- 16,647 ---
 Reorganization costs 11,324 --- 20,270 ---
 Other 7,785 --- 13,935 ---
 Total 97,965 2,000 175,357 3,580
 3. Taxation
 1992 1991 1992 1991
 000 pounds 000 pounds $000 $000
 Taxation based on (loss)/profit for the period:
 UK corporation tax at 33.2 percent
 (1991: 34.2 pct) (638) 25,136 (1,142) 44,993
 Deferred taxation 1,028 10,329 1,840 18,489
 Overseas taxation 3,232 940 5,785 1,683
 Total 3,622 36,405 6,483 65,165
 4. Dividends
 1992 1991 1992 1991
 pence per pence per
 share share 000 pounds 000 pounds
 10p ordinary shares:
 -- interim 2.40 2.40 7,033 6,941
 -- final --- 7.60 --- 22,236
 Total 2.40 10.00 7,033 29,177
 5.85 percent convertible
 preference shares 5.85 5.85 --- 717
 6.875p (formerly 6.75p)
 convertible preference shares 7 6.75 1,148 2,335
 9.9878 percent (formerly 9.75
 percent) preference shares
 1997 of 10 pounds each 99.878 97.50 1,792 2,913
 Variable term preference
 shares of US $1 each --- --- 7,845 7,233
 US convertible preference
 shares of US $0.01 each --- --- 4,884 2,033
 Total preference shares 15,669 15,231
 Total --- --- 22,702 44,408
 Including the imputed tax credit, the total gross ordinary dividend for 1992 is 3.2p per share (1991: 13.3p). No final dividend will be paid on the ordinary shares.
 On Jan. 20, 1992 the directors announced that payment of dividends on all of the company's various classes of preference shares would cease until further notice. No dividends have therefore been paid since that date. Dividends on all classes of preference shares are cumulative and payment of arrears of preference dividends would be made before payment of dividends on ordinary shares recommended. Cumulative arrears as at Feb. 1, 1992 amounted to 1,554,000 pounds ($2,782,000). In addition, 4,543,000 pounds ($8,132,000) of dividends were accumulated but unappropriated at Feb. 1, 1992, relating to dividends on classes of preference shares which were not due for payment.
 5. (Loss)/Earnings per Share
 The calculation of basic earnings per share is based on the loss on ordinary activities after taxation of 125,950,000 pounds ($225,450,000) |(1991: 75,652,000 pounds profit) ($135,417,000)~ less the total dividends on preference shares of 15,669,000 pounds ($28,048,000) |(1991: 15,231,000 pounds) ($27,263,000)~ and the total arrears and accumulated but unappropriated amount of dividends on preference shares of 6,097,000 pounds ($10,914,000) (1991 pounds nil) and the weighted average number of ordinary shares in issue of 292,837,000 (1991: 241,243,000). No fully diluted earnings figure is shown for the year ended Feb. 1, 1992, as basic earnings per share is negative.
 6. Post Balance Sheet Events
 On June 11, 1992 Watches of Switzerland Limited was sold to Asprey plc for a cash consideration of approximately 23 million pounds (approximately $41 million), subject to possible adjustment which is not expected to be material. In the year ended Feb. 1, 1992, Watches of Switzerland had sales of 21.7 million pounds ($38.8 million) and profit before exceptional items of 887,000 pounds ($1,587,730). Net assets at Feb. 1, 1992 (excluding intercompany balances) were approximately 19.2 million pounds ($34.4 million).
 As a result of breaches of certain borrowing provisions, most of the Group's borrowings have become repayable on demand. However, a new facilities agreement has now been entered into with the lenders under which they have agreed to continue the existing loans and facilities to June 30, 1993, subject to termination rights and to compliance with new covenants.
 The company, its US subsidiaries and a number of its UK subsidiaries have given guarantees and fixed charges over their interests in the share capital and indebtedness of other Group members to secure all amounts payable under the loans and facilities referred to above and under the company's 4 percent convertible bonds. The company and those UK subsidiaries have also created fixed and floating charges over all their other assets to secure such amounts. No security has been granted over the assets of the group's US subsidiaries apart from the above.
 7. Accounts
 The above does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The auditors have given an unqualified report, which did not contain a statement under Section 237(2) or (3) of the Companies Act 1985, in respect of the statutory accounts for the 52 weeks ended Feb. 1, 1992, which will be delivered to the Registrar of Companies in due course. Statutory accounts in respect of the 52 weeks ended Feb. 2, 1991, have been delivered to the Registrar of Companies in England and Wales. The auditors have reported on those accounts, their report was unqualified and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985.
 -0- 8/21/92
 /CONTACT: James McAdam, executive chairman, or Gary O'Brien, group finance director, of Ratners Group plc in London, 011-44-71-499-1000, or Thomas C. Franco or Jeffrey G. Gibson of Broadgate Consultants, 212-229-2222, for Ratners/
 (RATNY) CO: Ratners Group plc ST: IN: REA SU: ERN


TS-KD -- NY003 -- 2045 08/21/92 09:48 EDT
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