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Alexon shares slump on profit warning; active talks underway to sell company

Published: 18:25 05 Sep 2011 AEST

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Shares in female clothing firm Alexon Group (LON:AXN) slumped a further 35 per cent today as it revealed another profit warning.

After warning of ‘challenging trading conditions’ in July the group today said that its trading environment has deteriorated further.

It revealed that sales fell below the board's expectations in August. Like-for-like sales dropped 9 per cent in the first three weeks of the month. “Although this trend is improving, with sales in the last week of August down 1 per cent on a like-for-like basis, the trading environment and outlook remains very tough,” Alexon said.

Alexon now expects the group's performance for the year to be well below its previous expectations.

It also confirmed that it is in talks with ‘more than one party’ to sell the company. However no firm proposal has been received, it added.

Back in July, Alexon told investors that it was “actively exploring” options for a more appropriate capital structure to firstly reduce the business’s debt and also enable it to invest in the next stages of its turnaround plan. 

Today it said that this process is still ongoing, it is still looking at a number of options. And selling the company is one of those options.

Looking for positives, Alexon said that despite the challenging trading it has been making progress in a number of areas.

It highlighted that its online business maintained ‘very strong’ growth, improving 118 per cent at the half year. Although this part of the business makes up just 8 per cent of the group’s sales mix.

The company also said that the reshaping of the portfolio is on track and its re-fitted stores are still ‘significantly outperforming’ the balance of the estate. It also pointed out that the Kaliko and Alexon brands achieved double digit like for like sales growth. 

“Furthermore, the work which has been undertaken to develop each of the brands within the portfolio has resulted in the group receiving a number of approaches for additional new business opportunities for Spring 2012,” Alexon said. 

It stressed that these new business offers are ‘being scoped in the context of an ongoing portfolio re-shape’.

At 9:20 Alexon shares were down 2.5 pence, 35 per cent, trading at 4.5 pence each.

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