Donegal menswear maker Magee Clothing is projecting a return to the black this year as it reaps the benefit of a reform process that saw its pretax losses cut by 90 per cent to €177,935 in 2004.

The recovery at one of the last indigenous clothing makers comes after a fundamental restructuring which saw a series of big job losses in Co Donegal and Co Antrim as the company moved to outsource production overseas.

Controlled by the family of executive chairman, Lynn Temple, Magee is one of the last big employers in Co Donegal after a long series of job losses in the county. About 60 of its 230 staff in Donegal Town are still engaged in production with the remainder employed in its shop in the town, administration and warehouse.

Newly-filed accounts for Magee Clothing (Holdings) Ltd, its manufacturing and wholesale division, show that its sales in 2004 fell to €14.21 million from €15.26 million in 2003 while operating expenses fell to €5.14 million from €6.24 million. While severance costs were included in an exceptional restructuring charge of €402,754 in 2003, the company said it incurred no such costs the following year.

With the 2004 pretax loss down from €1.75 million in 2003, Magee finance director Tony Hanlon said the company was expecting to turn a profit this year after the completion of its restructuring programme.

"We're certainly forecasting a profit this year. Certainly Magee is over the worst of its problems and is now developing again as a brand," he said.

Known internationally for its tweed suits, the company has made a point in recent times of targeting the domestic market for business suits. Mr Hanlon said its retail business was also on the recovery path, with a pretax loss of €53,000 in 2004 down from €220,000 a year earlier. He said that part of the loss in 2004 was attributable to the cost of taking full control of the Magee of Donegal shop on Wicklow Street, Dublin, formerly run by Kennedy & McSharry.

In addition to this store and Magee's supply and wholesale operations, the company has a concession outlet in the Arnotts department store in Dublin and three own-brand shops in Britain, in London, Yorkshire and Carlisle. After a "relatively painful adjustment", Mr Hanlon said the company was now concentrating on the domestic market at its retail outlet in Donegal Town instead of the tourist market. This change was a response to difficulties in Donegal tourism, he said.