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Hobbs focuses on growth

By FashionUnited

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British high street fashion chain Hobbs is considering expansion into the US market, while it continues to show good profit and margin growth. Bought in a management buy-out last year by venture capitalist 3i and management, its pre-tax profits for the year have been estimated at £16.5 million, up from last year's £11.7 million, though the estimates were cut from £17.2 million. Operating margins rose to 17.4 percent from 16.3 percent for the year. Chief executive Nick Samuels expects to maintain this level of growth. "We entered this year's summer sale period with less stock than we did a year ago."

Only eight months after completion of the secondary buy-out from Barclays Private Equity for £111 million, there is already talk of an exit, most probably in the form of a float or a trade sale. Samuels told the FT that he did not see the point of a tertiary buy-out. In the meantime, however, the company is focusing on growth. Despite the profit forecast cut, new store openings are still on the agenda. "If anything, we have accelerated the programme," said Samuels. There are three new store openings planned for the fall and more concessions with John Lewis. Expansion in the US is also being considered and Hobbs is talking to several potential US partners about wholesaling to them. Furthermore, a Hobbs store is due to open in Kuwait and two more are planned for Dubai and Qatar .

Plans for extension of the brand, with licensed soft furnishings possibly in the second half of next year and glasses in the spring, are also underway. Hobbs is also considering entering the fragrance and beauty market, and is currently studying that market. Current trading is in line with expectations according to Samuels, who did admit, however, that the elegant line of this season's collectin did not do as well in current fashion's "boho" climate. The terrorist attacks had a devatating effect on foofall, although it is said to have recovered quickly. "It is really pure guesswork about the numbers," Samuels said. "You can have the most attractive offer, the best service, but it does not count for anything if people are not shopping."

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