US surge kicks Hi-Tec into black: Turnover soars at sports shoe group
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Your support makes all the difference.A POWERFUL sales advance in the United States helped Hi-Tec, the sports shoe group, to return to profit at the half- way stage.
The group made pounds 800,000 before tax in the six months to 31 July against a loss of pounds 2.8m last time. Overall sales were 29 per cent higher, but the most spectacular growth was recorded in North America, where turnover rose 74 per cent to pounds 23.6m, eclipsing UK sales of pounds 19.9m.
Operating profits from North America soared from pounds 636,000 to just above pounds 2m. The UK operations returned to profit, notching up pounds 800,000 against an operating loss of pounds 860,000 last time.
Continental Europe remained a black spot for the group, with operating losses increasing by pounds 250,000 to pounds 1.6m.
Frank van Wezel, chairman, said tough action had been taken to cut costs. 'The main problem is our Bad Boys fashion business, which is concentrated in Germany and Holland, which are both suffering very heavily from recession,' he said.
'The Bad Boys workforce has been cut by 40 per cent and has been totally reorganised at a cost of pounds 300,000. Further costs will have to be charged against full-year profits, but the business traditionally has a better second half for seasonal reasons.'
The sales growth in the US was fuelled by Hi-Tec's early move into the rugged outdoor shoe market. Mr van Wezel said: 'As the trainer boom faded we were among the first to spot the trend towards comfortable, more rugged outdoor boots and shoes - now we're a market leader and the others are scrambling to catch up.'
He said the trend had caught on in Canada and South Africa and the company was benefiting from having a full product range in place.
In the UK, retailers were in an increasingly buoyant mood, seeing more consumers coming through their doors. 'We have also not suffered from the destocking and dumping of American products on European markets that we saw last year,' Mr van Wezel said.
Mr van Wezel, who owns 55 per cent of Hi-Tec, was clearly relieved at the turnaround in the group's fortunes. Last year, its share price collapsed from 208p to 30p after losses of more than pounds 8m.
The group was then hit by controversy when two newly appointed non-executive directors - Sir Michael Edwardes, the former British Leyland chief, and Richard Fenhalls, who used to run Henry Ansbacher - resigned after just two months on the board.
Since then, two new non-executives have been appointed and the share price has recovered somewhat. Yesterday the shares rose 4p to close at 64p. The market was cheered by a 25 per cent rise in the interim dividend to 1.25p, although that did not restore fully the cut made last year.
Analysts forecast full-year profits of about pounds 2.5m before tax.
(Photograph omitted)
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