James Beattie has lowered the balance sheet value of its loss-making department store in Corporation Street, Birmingham, by £3.2 million, writing off the entire cost of all its fixtures and fittings dating back to the £7.5 million re-vamp in 2001. Operating losses at the store rose to £1.9 million in the year to January from £1.6 million the year before, while its sales fell by eight per cent - though they have steadied since the Bullring shopping centre opened last September. "Resolving this situation is our number one priority," said Beattie's finance director, Bill Kelly. "We want to trade it to profitability. We will have to give it time. It is going to take a bit longer than we thought." He stressed there is no question of closing the Birmingham store if it again fails to make money this year. Some of Beattie's highly successful stores had taken four or five years to become profitable, he said. "Even a small reduction in the loss is progress," Mr Kelly insisted. The write-down will have the effect of reducing the depreciation charge by £450,000 a year. It is largely offset by a £2.7 million profit from the sale of a site on the Wolver-hampton ring road previously used as a car park. The cash from this disposal was not received until after the year-end, but would have made the balance un-geared. Although Beattie borrows money for much of the year - and paid £507,000 in interest and finance costs last year - the new chief executive, Brian Heilbron, expects to have no borrowings next January. The City took this as confirmation of Beattie's ability to pay dividends. An unchanged final pay-out of 8.4p holds the year's total at 11.9p, costing £4.9 million and paid for a second year partly out of reserves. The shares responded by bouncing to 12412p, but settled back later to 120p - still 7p ahead on the day and yielding 9.9 per cent. That price is equivalent to 14.3 times year's earnings. Beattie's turnover last year rose marginally to £97 million, but profits fell to £4.23 million - not counting either the write-down or the property profit - from £5.18 million. Beattie's sales were hit by a policy decision to refrain from discounting before Christmas. Mr Heilbron said this was right because discounts would not have won enough extra sales to make up for lost margins. Beattie's three biggest stores - in Wolverhampton, Solihull and Sutton Coldfield - saw their profits fall by ten per cent, although their sales were only three per cent down. The six stores outside the West Midlands increased both their sales and profits. "Having been in the position of chief executive for only two months, I am currently in the process of conducting a review of the business and future merchandise strategy," Mr Heilbron said. "There are few indicators which suggest that the retail environment in 20005 will be more favourable than the year just ended. However, we are fortunate to have such a robust business which, we all believe, is capable of trading through such times." | 
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