Brown & Jackson in 21m pounds cash call: Poundstretcher group seeks retail park sites

BROWN & JACKSON, the Poundstretcher discount stores group, has launched a pounds 21m rights issue just a year after raising pounds 15.6m in a capital reconstruction.

Although the company had not intended to ask for funds again so soon, it claims to be ahead of schedule in its three-year plan inaugurated a year ago. Last year's exercise was to save the company from receivership. This year's is to snap up sites in retail parks, before a shortage develops.

Ian Gray, chief executive, said: 'Strong retailers are beginning to grab sites. If we wait, we could miss the boat.'

Some pounds 13m of the proceeds of the two-for-five fully underwritten issue will go towards plans to open 15 new stores this year and 45 next. The balance will reduce bank borrowings and be used to buy back shares.

Brown & Jackson's improved management information systems tell it that its 60 larger stores - 7,000 to 9,000 sq ft - trade much better than the smaller ones. It is therefore concentrating on larger, edge-of-town sites accessible by foot and often in discount complexes. A Poundstretcher just opened in Bradford trades alongside Aldi, Netto, Iceland and Superdrug.

First-half losses will be larger than in first-half 1992, the company warned. Margin reductions from stock clearances in January and February and investment in electronic point of sale systems are the main reasons.

However, the City is still expecting the company to break even by the year-end, representing a pounds 6.6m improvement on 1992. Much hinges on the second half, with 43 per cent of turnover concentrated between October and December.

The shares slipped 1 2 p to 141 2 p against a rights price of 12p.