BEALES is expecting to significantly reduce its losses in the current year but not turn a profit, its chairman has said.

Chairman Stuart Lyons said the Bournemouth-based department store chain was making good progress on a turnaround plan.

Last year, the company closed 10 loss-making stores and reached a company voluntary agreement (CVA) which allowed it to negotiate reductions to its rent bill on many sites.

It now has 20 branches including those in Poole and Bournemouth, where John Elmes Beale founded the business in 1881.

Mr Lyons told the annual general meeting of Beale Limited that its trading subsidiary JE Beale had “continued to make good progress in its turnaround” in the first nine months of the current financial year.

“This is mainly attributable to our company voluntary arrangement which has reduced the chain to 20 stores, all of which should be capable of making profits,” he said.

“As has been widely reported in the media, high street retailers have had a very tough year due to a combination of austerity, unseasonal weather conditions and economic uncertainty.

“Like many of our competitors, Beales sales have struggled. But we have worked hard to maintain gross margins and reduce costs, and we had an excellent Christmas week.

“Cumulative cash flow over the nine-month period was positive and profits moved past breakeven. However, this is, as you know, a highly seasonal business.”

He said the final quarter, from January to March, was “always a weak trading period, when trading losses are to be expected” and that conditions on the high street were still “difficult”.

He added: “With regard to the full year result, the most I can say at this stage is that we expect to see a significant improvement over the losses for last year, while not yet achieving a profitable result for the year as a whole.

“In summary, we have made considerable progress in turning the business round, but there is still work to be done to bring the group back to a consistent level of profitability.”

Beales was heavily in debt when it was taken over by investor Andrew Perloff for just £1.2million in 2015.

He appointed Mr Lyons to run the business as executive chairman and lead a Back to Beales campaign to draw people into the stores.