Marchpole: 40m Forward Orders, Global Network in Place

Reuters Interview - 15 November:

INTERVIEW-Marchpole plans expansion in Russia and China

Britain's Marchpole Holdings Plc said it aims to sign deals to expand in Russia and China, after the fashion brand management group quadrupled first-half profit, sending its shares up 4 percent. "I have got meetings lined up to discuss deals to expand in 15 stores in China and eight big stores in Russia over five years, in the next 18 months," Executive Deputy Chairman Michael Morris said in a telephone interview on Wednesday.

However, while China and Russia offer more growth than elsewhere, Morris said the company is also driving expansion plans forward in the United States and the UK.

"The biggest market for us right now will be the U.S. market, where we bought a company last year," he said, adding that he expects the American business to generate revenues of $30 million in 2007/08.

The fashion firm, which designs, produces and sells clothing for brands like Yves Saint Laurent (YSL) and Ungaro, surprised the market when it posted a fourfold jump in pretax profit to 4 million pounds ($7.54 million) in the six months to Sept. 30.

Revenue increased to 38.6 million pounds from 14.9 million.

Shore Capital analyst John Stevenson had expected first-half profit to be 3.4 million pounds and, following the figures, he upgraded full-year profit forecasts by 1 million to 8.1 million.

"The company appears to be on track to deliver a similar performance in H2," he said in a research note. Shares in Marchpole were up 4.1 percent at 117.18 pence at 1558 GMT, valuing the firm at 32.2 million pounds.

The London-based firm is in talks to acquire a business in the UK at the beginning of next year.

"The only area we have not started to push is the UK and next year we are going to start," he said, adding that the acquisition target was already "doing quite a large turnover".

The only fly in the ointment could be the termination of the long-term agreement with YSL at the end of the year, after the firm's house policy changed with the takeover by Gucci and licensing agreements were not renewed.

However, Morris said the company was well positioned. "The termination of the agreement would have an impact, if our strategy was not correct," he said, adding that he expects the brand Ungaro to replace YSL.

"We have just taken a new design onto the Ungaro brand, the the Ungaro people are going to open more stores and this will replace YSL."