Monsoon forecasts clouds on horizon

The fashion group Monsoon painted a mixed picture of trading on the high street yesterday, admitting that conditions would become "more challenging" as it posted record interim profits.

Peter Simon, the founder and chairman, said: "The first quarter is going to be very difficult for everyone but what matters is the operating profit. That's the issue, not like- for-like sales."

Monsoon, which pioneered the upmarket ethnic-look for well-heeled ladies, said underlying sales rose by 2 per cent over the four-week Christmas trading period, an improvement from a 1 per cent gain in the six months to 24 November. Pre-tax profits after exceptionals for the half year were up 9 per cent at £17.7m and sales rose 8 per cent to £107.7m.

Sales growth picked up after the post-Christmas sales started, rising to 11 per cent in the two weeks to 4 January. The group said it was "comfortable" with its stock position and that it had maintained its profit margin over the new year period.

Monsoon also announced that its finance director, Andrew May, had decided to step down. Mr May – a schoolfriend of Mr Simon's and 22-year company veteran – is not leaving to join another retailer and will not receive a pay-off, Mr Simon said.

Despite revealing plans to take a £815,000 hit to cover poor trading at its US joint venture, Mr Simon said he had taken "no decision" to close any of the group's nine stores there. Profit-taking took its toll on the shares yesterday, which fell 5.5p to close at 106p.