Leading Belgian shoe chain Brantano on Wednesday said it is still mulling over a potential merger with holding company Mitiska as it posted a steeper-than-expected slide in 2002 profit amid trouble at its Dutch unit.

The operator of nearly 300 stores reported an 84 per cent plunge in 2002 pre-tax profit to $3.2 million from the year prior with sales up a lower-than-anticipated six per cent year-on-year to $322m.

The company is currently revamping its Dutch operations and has brought the loss-making unit under the wing of its Belgian management in an attempt to turnaround its fortunes by cutting costs.

Brantano cited extra restructuring costs of $4.2m euros at the unit for its profit plunge and added lower sales had cut core profits by almost $3m.

The firm last month said it sees sales up to around $360m in 2003 as it reaps the rewards of 45 new stores and its recent acquisition of 28 Famous Brunswick Warehouse outlets in the UK.

'For 2003, we project a slight increase in sales revenue from the existing shops," said Brantano spokesman Joris Brantegem. "We want to ensure the profitability of our two strongest and most important countries, Belgium and the UK, primarily by means of further margin improvements and active cost management.

"We expect the Danish shops to make a positive contribution in 2003. We are confident that we can get our operations in the Netherlands back on the right track and carry out a successful restructuring.

"The distribution centre in the Netherlands has been closed, and the integration of the Dutch organisation into the Benelux organisation in Erembodegem has been completed. Our attention is now focused on the contribution of the Netherlands shops."

He added: "With regard to the shareholder structure, I can say that the merger project with Mitiska is being discussed and further investigated by the management board."