There is still no word from Brantano’s head office in Belgium on its possible privatization. As indicated in the last issue, the three main shareholders of the publicly trading footwear retailer - Mitiska, Sobradis and Retail Partners – have asked a Belgian investment banker, Peter Cam, to sound out potential new investors that may want to take over the company and take out of the stock exchange.

That process is still on.As it turns out, the search for a new investor has been prompted by Retail Partners’ desire, expressed in July, to cash out of the company. Retail Partners, a private equity firm that belongs to the Fortis bank, acquired 16 percent of Brantano’s shares at the end of 2003.

Mitiska, which also owns A/S Adventure and other businesses, holds 24 percent. Mitiska’s main shareholder, Joris Brantagem, and his family control Sobradis, which owns another 16 percent, and the rest is traded publicly. Brantagem, who acts as chairman of Brantano, has stated that he and his companies would like to continue to be involved financially in the shoe retail company, but are open for any kind of deal.

Brantano managed to raise its gross margin to 50.7 percent of sales in the 1st half of 2006 from 50.3 percent in the same period a year ago, thanks to more careful purchasing and stock management and following the introduction of a new sales policy in the UK, where it is discounting seasonal merchandise less quickly.

However, higher rental charges in the UK and the previously reported 3.8 percent drop in the company’s turnover led to lower operating results and to a drop in net income to €0.9 million from €1.6 million. Operating results were flat in Belgium, while in the UK there was no inflation in staff or marketing costs. The fall would have been greater without an operating gain of €2.2 million for the sale of a property in Belgium and of a store lease in Britain.

As previously reported, bad weather and the new commercial policies pursued in the UK led Brantano to a decline in turnover to €140.3 million for the 6-month period, or €5.5 million less than a year ago. As a percentage of sales, operating earnings declined from 9.2 to 6.3 percent before amortization and depreciation (EBITDA), and from 6.1 to 2.7 percent before interest and tax (EBIT).

Reduced finance charges didn’t prevent a drop in pre-tax profit to €2.7 million from €7.6 million for the company’s continuing operations. Discontinued operations had contributed a loss of €3.1 million in the year-ago period, but they had no effect in the latest one. The equity/debt ratio stood at 33.1 percent as of last June 30.

While the company ended up with an operating result of only €3.8 million in the 1st half, the management is currently expecting a result of €11-13 million for the full year on sales of €295-300 million.

During the last 6-month period, Brantano opened 4 new stores in the UK, while closing there three others. It ended up with a network of 281 stores, including 124 in Belgium and Luxembourg, 146 in the UK and 11 franchises in the Middle East. Four more openings in the UK and one in Belgium are in the pipeline for the 2nd half of this year.