Underlying operating margin was 9.5% for the half year (2010: 14.9%), adversely impacted by the UK distribution centre issues but also increased input costs (primarily cotton price increases as communicated to the market in January 2011), offset by increased margins following the acquisition of SuperGroup Europe BVBA in February 2011. In addition, the full year impact of investing in the business to support growth reduced operating margins further.
Reported profit before tax was £20.3m, up 39% compared with the same period last year (2010: £14.6m), after the effect of revaluing both forward foreign exchange contracts and the deferred contingent consideration relating to the acquisition of SuperGroup Europe BVBA.
UK Distribution Centre - systems and operational issues The UK Retail business experienced a number of issues relating to the implementation and integration of a new warehouse management system at the end of August to increase capacity at the Distribution Centre and to manage future growth.
The key issues facing the Group related to the replenishment of the UK Retail estate which resulted in incorrect stock profiles in the majority of stores, coupled with incomplete size ranges on key lines.
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