Ambitious Merchant reveals healthy profits

The group, which operates 74 stores in the UK, plans to expand into mainland Europe within the next 12 months.

The announcement came as the group revealed a 34 per cent rise in profits.

Philip Newton, chief executive of the group, said Merchant was already on track to reach its target of 125 Perfume Shops in the UK by 2004.

His upbeat forecast came as the group posted pre-tax profits for the year to March 31 of £8.1m, up from £6.1m last year.

Turnover was also up, from £100.4m 12 months ago to £111.8m, following a number of store openings.

The group, which opened 12 new stores during the last financial year, also has plans to introduce make-up and skin care shops.

Despite the opening of Debenhams in Sunderland, the city's Joplings store had performed well.

Mr Newton said: "The year which started out with some degree of trepidation when Debenhams opened in direct competition to us, has turned out much better than we expected.

"A plan to meet the Debenhams challenge was in place 18 months before the store opened, and it has become second nature to Joplings staff.

He added: "The success of this plan has seen no loss in contribution from the Sunderland store since the Debenhams opening, with gains in like for like terms."

As well as Joplings in Sunderland, Merchant also operates at Tynedale Park and Robbs in Hexham.

Its operations outside the region include "the Selfridges of St Hellier", A de Gruchy.

Merchant, which is based in Windsor, Berkshire, is also on the lookout for a third department store, said Mr Newton.

Looking to the year ahead, he, said: "There are real opportunities for significant growth in both the Perfume Shop and the department store divisions, and we have the people in place to deliver that.

"The start we have made to the current financial year has done nothing to dilute our enthusiasm for the future."

Shareholders will receive a total dividend of 1.15p per share, up from last year's payment of 0.80p.