Pre-tax profits at accessories chain Claire’s crashed to £190,000 after a fall in like-for-like store sales and currency fluctuations hit UK trading.
For the year to February 2 pre-tax profits dropped by 96% from £4.9 million in 2007. Sales fell by 0.7% to £157m, compared with a rise of 3.5% in 2006.
The exchange rate impact on inter-company loans and the 36% decrease in EBITDA to £8m during the year were the major contributing factors for the fall in pre-tax profits, according to Claire’s.
Finance director Simon Hope said: “Rent and wage pressures also contributed [to the fall] but the year as a whole in Europe hasn’t been bad.”
The company opened seven new stores during the period, taking its UK total to 461, but Claire’s blamed a drop in like-for-like store sales for contributing to the decline.
The accessories retailer also said that currency fluctuations against the pound resulted in net foreign exchange losses of £279,000 during the year, compared with net gains of £727,000 in 2007. Claire’s said the global economic crisis and the UK entering a recession were likely to affect future trading.
Last month, Claire’s appointed former Levi Strauss & Co vice president Kenny Wilson as European president. He will join in January to replace Mark Smith, who will remain as an adviser.