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Aurora Fashions posts operating profit of £23m in inaugural year

Aurora Fashions, the group which operates chains Oasis, Coast, Karen Millen and Warehouse, posted operating profits of £22.6m in the 11 months since it was reborn from the wreckage of the Icelandic financial meltdown.

The group, once backed by defunct Icelandic investor Baugur and born out of the pre-pack administration of Mosaic Fashions last year, reported that it had performed “ahead of plan” in its first year and that debt reduction is ahead of schedule.

‘Targets exceeded’

Aurora generated EBITDA of £38.6m on global sales – including those from joint ventures and franchising – of £661m in the period to January 30. Debt was cut to £109m. Online sales rose 23% and international turnover was ahead by 10%.

“Not only have we demonstrated strong incremental sales from physical expansion in our domestic and international markets, but we have also achieved solid like-for-like growth with margins up on last year”

Aurora chief executive Mike Shearwood

Aurora chief executive Mike Shearwood said: “I am delighted the business has emerged in such great shape. We have built the foundations for future growth and exceeded the targets set when Aurora was founded.”

Credit insurance and hedge reinstated

Credit insurance was reinstated in March this year and a $175m hedging facility was put in place at the end of the first half, allowing margins to improve after they were negatively impacted during the first few months of the year by the weak pound.

One-off exceptional restructuring costs of £57.9m were incurred during the year including payments to a number of suppliers to the Mosaic group prior to its collapse.

International

150 international stores and concessions were opened during the year - 83 company owned stores and 67 franchise stores. The group trades from 1,471 stores in 45 countries. International sales now represent 34% of the groups global retail sales. Spain and Germany were strong markets for the group.

Ecommerce

The group is also poised to ramp up its ecommerce sales which represent 10% of total sales. The group will launch its first local language sites in Europe and Karen Millen and Coast will launch dedicated US websites with local fulfillment. The group will also launch a click and collect offer.

‘Solid’ like-for-like growth

Shearwood added: “With less than two weeks to go to our half-year, I am particularly pleased to say that not only have we demonstrated strong incremental sales from physical expansion in our domestic and international markets, but we have also achieved solid like-for-like growth with margins up on last year.”

Over the year, Oasis slashed costs and streamlined distribution. During the period Shearwood was appointed chief executive and Derek Lovelock moved to chairman of the group. Meg Lustman was named managing director of Warehouse and Steve Price and Gemma Metheringham became joint managing directors of Karen Millen.

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