Mackays Stores has posted a pre-tax loss of £2.1m and revealed that Iain McGeoch, 70, has stepped down as chairman and chief executive 52 years after co-founding the business.

Mr McGeoch has handed on one of Scotland’s most successful but more publicity-shy family businesses to sons Andy, chief executive, and Neil, property director, and appointed an external chairman - though he will still actively chair a group board..

It follows a third successive year of underlying pre-tax losses for the clothing retailer behind the M&Co brand, based in Renfrewshire, which has around 60 stores and 900 employees in Scotland. But the current year has seen the best first half trading since 2010, the company said.

Latest accounts show a £2.1m pre-tax loss, following an underlying (net of pension gain) loss of £2.7m last year and a loss of £2.3m in 2012. Pre-tax profits had doubled to £10.4m in 2010 and peaked at £11.5m in 2011.

The company said: “Iain, with his brother Len, grew M&Co from six pawnbroking stores to what is now a global fashion chain of almost 280 stores worldwide.

“Andy joined the company 12 years ago and has gained experience across many areas of the business. Neil, a qualified chartered surveyor, has been working with the company since 2010. He also runs the group’s renewable energy division.”

Steve Knott, former managing director of HMV Europe, Waterstones and World Duty Free is the new chairman, but the statement went on: “Iain will continue to take a very active role in a non-executive capacity and chairs the group board.”

Turnover rose from £158m to £160m, a rise of 1.3 per cent on 2013 following the 6.3 per cent fall reported a year ago.

The group stressed the positive £6m result on earnings before interest, tax,amortisation and depreciation, though this was half the £12m reported for 2013.

Underlying operating profit slid from £6.3m to £1m. The company said online sales continued to grow strongly and the gross profit margin was up from 19.5per cent to 20.4 per cent,.

It said five unprofitable stores had been closed during the year and 22 international franchises were now in operation.

The accounts show debt increased from £16.3m to £18.2m, and shareholder funds fell from £77.1m to £70.8m. The highest-paid director, assumed to be Iain McGeoch, received £240,009, up from £235,062.

Andy McGeoch said: “In the current financial year, our first half results show an encouraging 90per cent year on year growth in operating profit together with both increased sales and gross margin. This represents our best opening half in the last five years.”

He added: “As M&Co’s target customer is a 40-plus year old shopping for herself and her family, we believe that the business is ideally placed to take advantage of the demographic growth in this market.

“With the resurgence in local shopping our store portfolio, which is largely located in prime positions in market towns, is well situated.”