Dawson profit slumps as rising costs bite

published 1 December 2011

Cashmere knit firm Dawson reported a 34% drop in half year profit as it continues to battle against rising raw materials costs and the ongoing dispute with its pensioners.

The group said pre-tax profit for the year ended 1 October fell to £1.1m compared to £1.7m the same time a year earlier. Turnover slipped to £19.8m from £21.5m in 2010.

Dawson, which sold its home furnishings business in May for net proceeds of £6.5m, said its focus now was on growing its cashmere business by expanding its customer base in both new and existing geographical areas.

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Dawson said the difficult global economic conditions coupled with significant raw material price increases in the last two years has had a negative impact on its results.

"We have traded ahead of our expectations in the first half of the year but this is due at least in part to the timing of sales and our expectations for the full year remain broadly unchanged," Dawson said in a company statement.

Margins at its US business were impacted by significant cashmere price increases in the past two years. Dawson lost a key US customer, department store Talbots after it decided to source cheaper products from China.

Meanwhile talks with its trustees and regulators over the company's pension deficit continue. Dawson is cautiously hopeful that negotiations with the Pensions Trustees and the Pensions Regulator are reaching a conclusion.