Textile firm Dawson to beat profit targets

Dawson, which is almost 29 per cent controlled by Yorkshire textile company Leeds Group, said a good final three months in the year to January 2 for its UK and US Knitwear businesses had more than offset "continued weakness" in its home furnishings business.

"It is anticipated that sales and profits for continuing operations will be ahead of market expectations for the year," it said in a trading statement.

Dawson said the British knitwear business benefited from the timing of high margin sales to couture customers, significantly boosting margins in the final quarter.

It added: "This is likely to have some negative impact on the first quarter of 2010 with the sales mix impact reversing."

"The US knitwear business sustained sales and margins through the final quarter in spite of the fragile US economic environment.

"In particular, in-season sales of branded lines and overall margin levels were both stronger than expected."

The private label home furnishings business saw "poor" margins throughout the year and the pound's wseakness compared to the dollar hitting its cost of sales.

"While this improved somewhat in the second half of the year it is anticipated that the business will report a small loss overall."

The branded home furnishings business continued to incur trading losses, it added, as it managed an exit after the sale of the Dorma brand to Dunelm Group in 2008. This exit will be completed in the first half of this year, Dawson said.

The discontinued Todd & Duncan business, which traded at a loss in the first half of the year, made another loss in the period to disposal on 28 August. It also required an additional provision of 500,000 for doubtful debts.

Dawson said that it had agreed a payment plan over the $10m owed to it by the Inner Mongolia King Deer Cashmere Company, which is fully provided against. Now $500,000 has been received in the first half of the year and $1 million in the second half.

Its pension scheme is expected to show a "significant" deterioration in its annual accounts, which will include an updated actuarial valuation of defined benefit liabilities.

This would reflect the general market trend and show a significant deterioration, principally due to lower corporate bond yields and increased longevity assumptions, it said.