Alexon warns on profits as the big freeze hits its sales

WOMENSWEAR retailer Alexon yesterday said the UK’s big freeze had hurt the past three weeks’ trading and could wipe up to £1.5m off its full-year profit forecast.

The retailer said sales fell 19.9 per cent for the three weeks to 18 December in stores open for more than a year – leaving it with a 4.7 per cent like-for-like sales decline for the full-year.

Between 40 and 60 of its 990 stores were forced to close in each of the three weeks, while its older customer base had simply stayed at home, its trading update said.

The profit warning due to snow follows similar warnings from fellow retailers HMV, Game Group and JJB.

The revenue slump could also cause Alexon to breach a bank debt covenant agreement.

The news is fresh concern for Alexon after it finally stabilised trading in November, following a prolonged contraction and a major sales slump due to snow in January.

Alexon’s shares have lost more than half their value this year and yesterday closed 20 per cent lower at about 12.25p.

Analysts, which had forecast a consensus £2.8m full-year pre tax profit, downgraded expectations to between £1.5m and a loss.

Philip Dorgan, an analyst at Altium Securities, described Alexon as the “the first casualty of Christmas.”

He said he downgraded the retailer from a £2.6m full-year profit to an £0.8m loss after seeing it both start and end this calendar year with a profit warning.

Seymour Pierce analyst Kate Calvert said the news showed how highly geared Alexon was. “Small changes can have a big impact,” she said.

Brewin analyst Michael Vassello said Alexon’s new clothing collections were performing well. He forecast £1.3m full-year 2011 profit and £3.5m profit in 2012 but warned it had missed valuable
Christmas sales.