Mail order retailer Slimma has warned that profits for the year to September will fall well short of market predictions due to additional brand investment, reorganisation charges and sales weakness at the company's contract clothing business.
The Staffordshire-based group, which employs 51 people at Leek, had warned in May that the cost of its three-year investment plan would hit second-half profits, as the benefits would not be realised until next year.
In addition, reorganisations at Contract Clothing and Frank Usher have led to second-half exceptional costs of around £200,000.
Slimma said trading for the rest of the year is progressing to plan with positive initial responses to the new spring/summer 2007 ranges.
The group said it is confident that the costs associated with the brand investment programme will provide a positive return in the future and said it aims to pay an unchanged final dividend of 3.5p for the current year.
The group also said it plans to buy back up to ten per cent of its share capital and that it is in final talks to sell its head office building in Leek for around £1.05 million.
Slimma will lease back around a fifth of the building, which currently houses the Contract Clothing and Peter Martin Groups as well as head office.
Proceeds from the sale, which is not expected to be completed until next May, will be used to reduced borrowings.
Stephen Thwaite, chief executive of Slimma, said there was no reason to panic.
He said: "We are really excited, because we have managed to do something which will increase our profits in the future.
"The money saved from the reorganisation - which we estimate to be around £300,000 - will go into the launching of two of our brands in America.
"We could have not done the reorganisation and kept the profits at the same level as before, but it is no good to stand still."
As part of the investment, Slimma was launching the Peter Martin and Cattiva brands of women's occasional wear in the US.
