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Marchpole profits fall back on expansion

Marchpole, the brand supplier and distributor, saw first half pre-tax profit slump to £0.5 million for the six months to September 30 against £4m for the same period last year.

Sales at Marchpole also fell from £38.6m to £29.9m for the same period. However if sales of Marchpole's lucrative YSL license, which expires at the end of the year are excluded, turnover rose from £10.1m to £29.9m.

Marchpole blamed the fall in profits on its expansion and growth strategies. It has signed several new licenses and distribution agreements with Lee Cooper and New Era via its Jean-Charles de Castelbajac brand. The company has also opened stores under its Jean-Charles de Castelbajac brand and Emanuel Ungaro label and extended distribution into new markets including Russia, the Middle East and the Far East.

Deputy chairman Michael Morris said: "Whilst these results are showing a slow down, the reduction in our level of profitability is a direct result of our growth and expansion way outside of our traditional geographies and modus operandi. This has been a period of transition for the company as we expand into the highly lucrative Russian, Eastern European, and Far East markets. The Company is no longer reliant on a single brand, and is now a multi-brand global business. Many of our labels are still in relative infancy stages in these dominant, luxury brand driven markets and we believe that our three to five year expansion programme into these markets can deliver value way in excess of what could be achieved with our former business model."

“We remain confident that Marchpole is well positioned for continued development, to maximise earnings enhancing opportunities as they arise. We intend to maintain our total dividend distribution for the next period and remain committed to delivering solid growth over the medium to longer term,” Morris added.

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