Tie Rack learns its lessons

Strong sales abroad have combined with tight cost control to produce record profits at Tie Rack, one of the few survivors from the boom in niche retailing in the 1980s. Results yesterday showed pre-tax profits jumped 11 per cent to £7.41m in the year to end-January.

The figures were in the mid-range of expectations, but were still good for a 3p rise in the share to 112p yesterday. They were supported by a hefty 29 per cent lift in last year's dividend to 2.25p.

Despite a 5 per cent dip in like-for-like sales, turnover advanced 7 per cent to £83.9m last year. Overseas sales showed the most impressive growth, rising by 14 per cent to represent 41 per cent of the total - up from 39 per cent in 1994. UK turnover was anaemic by comparison, rising by just 3 per cent.

Tie Rack has learnt from its over-rapid expansion into the US in the late 1980s. It has clamped down on costs and is choosing prospective partners with more care.

Airport developments remain a priority. The group has 38 shops in 23 airports in 12 countries. New openings for this year already include seven airport shops, one of which was the group's first shop in South Africa. In total, shop numbers increased by 28 to 329 in 1994 and Tie Rack now operates in 19 countries.

Analysts expect current-year profits of £8.1m. There will be further sales growth in 1995 from increasing the number of outlets overseas, but the shares look fairly valued on a forward multiple of nearly 12.