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Monday, August 30, 1999 Published at 15:13 GMT 16:13 UK

Business: The Company File

Storehouse 'in surplus crisis'

Sales have fallen at Bhs and other Storehouse shops

UK retailer Storehouse, which owns Bhs and Mothercare, is reported to have severe stock problems after making too large orders for its autumn/winter season.

The Times newspaper said Storehouse had ordered Mothercare's season's stock in February - before closing 20% of its stores.

The chain now faces having to sell the excess in a Christmas sale which will impact upon its spring/summer collection next year, the paper said.

It quoted a company spokesman who said clothes ordered for this season were intended for 360 stores, but only 290 stores were still open to sell them.

Sales slump

The spokesman said: "The orders were made before the decision to close the stores.

"We are now working with our suppliers to see how we can address the issue going forward."

Earlier this year, Storehouse chief executive Keith Edelman quit following a warning that the company faced a cut in profits.

Storehouse profits dropped from £125m to £98m in the year to March.

A slump in children's clothing sales at Mothercare hit the retail chain particularly hard.

Profits at Mothercare - once its most profitable section - were nearly halved from £31m to £18m.

Storehouse said it was looking to narrow the range of goods it sells through its stores, which is likely to involve cutting many of its suppliers.

Possible break-up bid

Speculation is mounting that the group will be forced to put itself up for sale before poor Christmas results further damage its share price.

A spokesman for the board of management said that break-up was among a range of options the company was considering, but that there were no immediate plans in the pipeline.

Debenhams has ruled itself out as a possible buyer, but Arcadia, who recently became the UK's second largest retailer by scooping up Sears womens' shops, may be interested.

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