ACT.L Regulatory News (ACT)

1 Sep 2005 07:30

Actif Group PLC01 September 2005 1 September 2005 Actif Group plc ( the "Company") Trading Update In the Company's interim statement in April this year, the Chairman reportedthat whilst the first half of the financial year to 29th January 2005 wasbroadly in line with expectations, the Company was seeing much tougher tradingconditions in the second half to date. He also stated that the Company did notanticipate any improvement in market conditions for the remainder of thefinancial year. These challenging market conditions have had a greater impact on the Company'strading performance through the second half of the financial year thanpreviously anticipated. Total ELLE retail sales for the 26 weeks to 30th July2005 were 14% below last year, a like for like decline of 13.5%. In wholesalesales, buyers are continuing to be very cautious about placing Autumn / Winterorders, resulting in sales coming through at broadly level with last year. The timing of this consumer downturn has masked some of the improvements theCompany is making in the product offer and the Board is encouraged by the earlyprogress Catherine Scorey, the recently appointed Commercial Director, has madein revitalising the ELLE ranges. The improvements have been particularlynoticeable on core 'heritage' styles where improved sell through rates, andEuropean sourcing have contributed to significantly reduced stock levels, which,in turn, has helped to protect the Company's cash position. Overall though, in common with many other retailers, the Company is seeingprofitability being adversely affected by weak levels of demand relative to lastyear, and significant pressures on the cost base through rising retail rents,business rates and energy costs. The Board now expects these conditions tocontinue through 2006. In response to this, the Board has developed and is currently implementing plansto realign the Company's cost base to a level appropriate to this reducedopportunity. The Board expects to see annualised savings in the region of£750,000 per year, which equates to around 20% of central overhead. The largeproportion of this saving relates to a reduction in head office workforce, whichwas completed this month, and will ensure that the Company is able to benefitfrom the majority of these expected cost savings in the new financial year. As a consequence of the impact of the market conditions on second half trading,and the costs of implementing the business realignment plan, the Board nowexpects the Group to make a loss before tax of around £450,000 for the 12 monthsto 30th July 2005. The final results for the financial year to 30th July 2005 will be announced inOctober. Mark Evans, Chief Executive of Actif Group comments: "Clearly it is very disappointing to report on a loss-making year. However, in atough market environment, we have taken quick and decisive action to implement abusiness reorganisation plan to ensure the Group is in a strong position to rideout this consumer downturn. Our core product offer, focusing on ELLE's heritageas a stylish, casual brand, continues to have broad market appeal and awell-established distribution network. Our improving strength in design andsourcing will enable us further to differentiate our offer, which we believe iskey to the continued appeal of the ELLE brand in a very competitive UK clothingmarket. We will seek further opportunities to reduce our cost base without compromisingthese core strengths, and in so doing will ensure we are positioned to takeadvantage of any improvement in market conditions through 2006" Enquiries: Mark Evans, Chief Executive, Actif Group plc Tel: 020 7462 8801Wendy Baker, Hudson Sandler Tel: 020 7796 4133 This information is provided by RNS The company news service from the London Stock Exchange