Alexon to raise capital to fund recovery
08 March 2010 09:08
Alexon Group has announced plans to raise £20.3 million to accelerate its recovery. The capital will be raised through a share offer to fund its turnaround plan, which involves exiting 63 properties that have unfavourable commercial terms or are in inappropriate locations.
The group will use £10 million of the new capital to pay debts relating to property changes, with the remaining £8 million used to invest in systems, refit old concessions and invest in new concessions and open new stores.
The retailer added that its pre-tax losses for the year to January 30th 2010 were not expected to be below £1 million although sales were declining at a slower rate since the start of the new financial year. Like-for-like sales fell by 3.7% in the four weeks to February 28th, with like-for-like sales down by 12.6% in the six months to August 1st 2009.
Richard Handover, chairman of Alexon, commented: "Alexon Group has strong brand equity and has historically been profitable and cash generative but in recent times the group has lost market share due to underinvestment over several years. In addition the group's financial performance continues to be significantly affected by a large number of onerous property leases, as well as cash constraints on investment. The new management team has developed a turnaround strategy which is now being implemented and there is good evidence of this working.
"Today's announcement will enable Alexon to accelerate its turnaround plan and is in the best interests of Alexon, its shareholders and other stakeholders. The Property Portfolio Reorganisation will establish a more appropriate operational structure for the business, whilst the increased investment in systems, concessions and store openings will ensure Alexon has a strong platform to grow going forward".
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