Burton to close troubled IS

BURTON GROUP is to close its loss-making IS discount clothing chain by the year-end and sell all 79 outlets. Costs of closure, trading losses and disposal will be taken as a pounds 20m charge against profits in the year to 3 September, writes Terence Wilkinson.

The move to axe IS, set up in 1991, came with a statement on summer trading. This said that although the Burtons chain remained a drag on performance, sales and profits met expectations.

The group said its policy of reducing the level of discounted sales was being carried out and the overall gross margin was 0.6 per cent below the level of a year ago. In the first 11 weeks of the second half, the margin was 2.3 per cent lower, implying some improvement in the past two months.

But sales growth in the 22 weeks to the end of July had slowed to 3.1 per cent from 4.7 per cent in the first 11 weeks of the second half.

'It seems that Burtons still faces the age-old problem of losing out on sales growth as soon as it takes action to stop discounting and return to a full margin,' said Andy Hughes, retail analyst with UBS.