PRE-TAX profits at Joseph, the fashion retailer that is up for sale, fell nearly 20 per cent in the year to April 2004, it emerged yesterday.

As bidders line up to file their second round offers of about £100 million, accounts lodged at Companies House this week showed that Joseph’s pre-tax profits dropped to £7.88 million. Operating profits in the UK and the Irish Republic, which account for most Joseph’s business, fell by more than 30 per cent.

The opening of a store in Kent and three concessions, however, helped sales in the UK to rise 8.8 per cent to £50.1 million, while sales for the rest of the world rose 31 per cent to £8.8 million. Group sales in the current financial year are thought to be about £70 million.

It is understood that the strengthening euro in 2003-04 squeezed profit margins because a large portion of the retailer’s merchandise is bought on the Continent.

Bidders for Joseph are understood to include Hicks Muse, the US investment company, and rival private equity firms Permira, Isis Equity Partners, Phoenix Equity Partners and Barclays Private Equity.

The Compagnie National à Portefeuille, the investment vehicle of Gerald Frère, a Belgian financier, owns 57 per cent of Joseph, and the remainder is shared between Joseph Ettedgui, the founder, and his brother, Franklin; L Capital, an investment arm of LVMH, the luxury goods company; and Power Financial, a Canadian private equity firm.

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