Bombed out company mostly trading in the US - manufacturing and retailing up market leather shoes/handbags.

Shares are tightly held and recent US retail downturn caught them out .... shares were well sub a penny until yesterday when they were in backwardisation all day .....

anyway - up again today and could be worth a speculatative punt - massive turnover could mean any increase in sales or decrease in costs will filter very nicely to the bottom line


ains

SWEETINGHAM,net asset value per share 15.19p.

LONDON (AFX) - Hartstone Group PLC said it is evaluating its strategic
options after severe pressure on US margins and sales pushed the group into the
red in the year to March 31 2003.
The group incurred a pretax loss of 7.04 mln stg for the year, down from a
profit of 1.12 mln a year earlier. Total turnover fell to 75.1 mln stg from 99.6
mln.
The loss per share for the year was 4.9 pence compared with earnings per
share of 0.6 pence.
Chairman Shaun Dowling said the "very high" losses were incurred despite
cutting overheads by 4.1 mln usd in the US at Etienne Aigner.
He said future recovery depends on an upturn in department store sales for
good quality shoes and accessories. "In the meantime, given current market
conditions, the directors are evaluating strategic options for the future of the
group."
Hartstone also said today that talks to sell Etienne Aigner have been
terminated.
Over the last seven months the group has been negotiating with a US
purchaser and his partners to divest the Aigner business and return cash to
shareholders. The issuing of the group results was delayed until negotiations
were complete, the principal terms having been agreed.
However, negotiations were terminated on July 21.
In the year under review, net sales at Etienne Aigner were down by 17.3 pct
and this led to an operating loss of 9.1 mln usd, inclusive of an impairment
loss of 1.0 mln usd on the property and equipment in full price stores and
higher reserves for inventories and allowances.
Etienne Aigner breached its banking covenants in September 2002 and again in
March 2003. This has triggered a halt on payments of group interest to the
parent company in the UK.
Dowling said the board had expected the business to recover last year from
the effects of Sept 11 2001, but it has certainly not done that. "In these
circumstances, it would be foolish to forecast a recovery with any degree of
confidence in the coming year."
However, he said forward orders at Etienne Aigner are higher than at this
time last year, and overheads in this year's budget have been cut back further.
Aigner's future therefore depends on the recovery of sales in the major
department stores and the willingness of American shoppers to buy better quality
shoes and accessories, Dowling said.