LONDON - Associated British Foods, which had helped itself to Littlewoods just over two months ago, has said that it is investing an extra £125 million to convert these stores into its Primark brand. ABF also said that it would retain a majority of Littlewoods' stores and sell a lesser number than previously announced.
ABF had brought Littlewoods in July for £409 million. But it has planned to keep only 25-40 stores and sell the remaining out of a total of 120 Littlewoods stores. The initial investment outlay was pegged at £375 million. "We have had a close look over the Littlewoods stores and decided to keep a few more than we first thought," said ABF Finance Director John Bason. It is being estimated that ABF could hold on to 40 more Littlewoods stores.
ABF chief executive George Weston is hoping to make a provision of £47 million in the current year's balance sheets to cover up the business closure costs, "As a result, capital expenditure and interest expense will be higher than expected in the 2005-06 financial year. The total investment includes the acquisition cost of the Littlewoods stores, the net cost of trading out and closure of the Littlewoods business, the refurbishment and fitting out costs for Primark less proceeds from the disposal of those stores not required," ABF said in a statement.
The group was confident of delivering similar returns in the second half of the year. And since the Primark chain had performed very strongly, ABF felt that they would benefit by converting more Littlewoods stores into Primark brands, "Our businesses in aggregate have performed well in the second half of the year and we expect, in line with our previous estimates, operating profit growth to be almost as strong as that achieved in the first-half," Bason said.
Posted
on : Mon, 12 Sep 2005 19:05 GMT | Business News
By : Paula Jenkins
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