Tie Rack keeps it tight

There is nothing Roy Bishko hates more than people describing his beloved Tie Rack as a niche retailer. He hates the term with a vengeance, since it lumps his company with all those former stars of the 1980s such as Sock Shop, many of which have fallen on hard times. His view is that Tie Rack is a cautiously run, well-managed retailer that happens to focus on neckware (ties and scarves to you and me).

It is plainly an overreaction, but you can see his point. While other 1980s "niche retailers" have fallen by the wayside, Tie Rack has been motoring strongly. Its shares, for example, have risen from 22p in 1991 to 165p, even after yesterday's 5p fall, and have enjoyed a meteoric rise in the past 12 months.

Yesterday saw another solid if unspectacular set of results. Profits of pounds 7.9m were a 7 per cent improvement on last time but hid a range of different performances. In the UK, where Tie Rack has 169 of its 379 stores, profits fell as a result of the hot summer and tough trading conditions. Like-for-like sales were flat. But the US business, which now has 63 stores, made its first profits since 1987.

As the UK market reaches maturity, Tie Rack sees most of its profit growth coming from overseas, particularly in Europe. It operates in 26 countries and will open 50 new stores this year, the same as in 1995.

The Rolling Luggage Company, a new format that started trials last year, will be expanded gradually from its current three outlets. The expansion is backed by net cash of almost pounds 14m.

Although steady growth can be expected, analysts were reining back forecasts yesterday.

Central costs are set to rise for the second year running as the company adapts its systems to cope with a larger empire.

NatWest expects profits of pounds 8.7m this year, which puts the shares on a forward rating of 16. Worth holding.