Storehouse increases dividend

STOREHOUSE, owner of the BhS and Mothercare chain, has increased its dividend for the first time since it was cut from 8.8p to 5p in 1990, writes Heather Connon.

Mothercare won back lost market share and BhS benefited from sales improvements and tight cost control.

The final payment was raised from 2.5p to 3p, giving a total for the year to 2 April of 5.5p, up 10 per cent. It was covered by earnings of 9.7p - the first time since 1989 - but Ian Hay Davison, chairman, warned that dividend cover was still not satisfactory.

The dividend increase refected a rise in pre-tax profits from pounds 15.2m to pounds 62.4m, partly due to a decline in losses from the sale of businesses from pounds 31.4m to pounds 6.4m.

The best performance came from Mothercare, where profits more than doubled to pounds 10.2m. Ann Iverson, chief executive - who is leaving for a new job in the US next month - attributed the improvements to the new store design, which has made them more attractive for mothers shopping with children, as well as to reducing the range of products stocked.

Twenty of the stores have been refurbished and 30 more will be completed by the autumn. The group aims to have 40 per cent of selling space refurbished within a year. Ms Iverson said the improvements had helped clothing sales to rise 10 per cent, three times as fast as the market.

The market share of equipment, such as cribs and prams, rose from 18.3 to 22.5 per cent.

At Storehouse, profits improved from pounds 44.1m to pounds 56.2m, although that was helped by a pounds 6m cut in the rent bill following the unwinding of a property joint venture.

That helped the group to keep costs flat over the year despite an extra week's trading, although Keith Edelman, chief executive, said they would be higher this year.

The extra week's trading contributed a quarter of the 8 per cent increase in group sales to pounds 1bn, while new space added 1 per cent to sales. Mr Edelman said that sales increases in the current year were similar to last year.

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