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Exclusive: Karen Millen makes loss following impairment charges

Karen Millen made an operating loss of £9.7m for the year ended February 28 2015, down from a profit of £1.9m the year before.

Karen Millen AW15

The premium high street retailer put the loss down to heavy impairment charges related to property and stock. Gross profit was broadly flat at £102m, compared to £104m the year before. Sales for the period were flat at £178m.

The company said it has been trading well since March, with like-for-likes over the past three months up 3%.

Last week, like-for-likes rose 18% year on year thanks to Black Friday, which lifted trade both in stores and online.

Karen Millen is in the final stages of appointing a new chief executive to replace Mike Shearwood, who left the business in September. It expects to make an announcement on this before Christmas.

The company completed a major refinancing with its parent company, Icelandic bank Kaupthing, in September.

Its debt has been significantly reduced and working capital facilities secured to support its investment plans, which are currently focused on improving its digital capabilities. The retailer did not reveal the figures.

“We’ve invested a lot in bricks until now, but not in ecommerce, so we’re behind where we should be,” Karen Millen chairman Neil McCausland told Drapers.

“This is a year of change. We have a very clear strategy to reshape the business. We have completed a major refinancing to implement our plan and we will soon announce a new CEO to lead the strong team and take the business forward.”

He said the refinancing put the company into a “significantly better position”: “It’s difficult to run a business without the right working capital facilities.”

Following the digital investment, Karen Millen will look at how to improve its operational efficiency, from head office to stores, and become more customer-centric.

This could involve the addition of a role such as chief customer officer; although no decisions will be made under the new CEO is in place.

McCausland said Karen Millen would take a “more aggressive” approach to closing loss-making stores and concessions next year, so it can redeploy the capital where it is needed.

The retailer has 84 company-operated stores and concessions in the UK and Ireland, 100 in Europe, 35 in the US and Canada and 21 in Australasia. It also has 160 international franchise stores.

Shearwood, who took over the reins at Karen Millen in 2007, left the business after it scrapped plans for a management buyout.

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