Johnstons of Elgin says sales could fall more than 30% this year
Historic textiles company Johnstons of Elgin has warned its annual sales will be significantly impaired as a result of the Covid-19 outbreak.
Speaking about the impact of the lockdown on its sales, chief executive Simon Cotton told Scottish newspaper The Herald that revenues could fall by more than 30% this year and he forecast a slow recovery for 2021.
It comes after strong results for 2019, with sales reaching £77 million on the back of growing demand from international consumers.
“Almost all our team have been furloughed for some period, as our mills and retail stores had to close during lockdown and have only recently fully reopened,” Simon Cotton said. The cashmere specialist operates two mills in Elgin and Hawick and in 2018 it opened a flagship store in Edinburgh’s luxury shopping quarter on Multrees Walk.
He added: “We expect sales for 2020 to be more than 30% down and are preparing for a slow recovery through 2021.”
But the privately-owned company, which had profits of £6.4 million last year, insisted it is in a good shape to cope with the uncertainty. Funding from the Royal Bank of Scotland was secured under the Government-backed Coronavirus Large Business Interruption Scheme, and the brand said it has a strong balance sheet.
“Despite the very difficult situation in 2020, we are extremely optimistic about the future in the longer-term,” Cotton commented.
The coronavirus crisis is only one of the reasons the brand is expecting sales to drop. With exports generating nearly £30 million in sales in 2019, continued uncertainty over Britain’s future trading relationship with the European Union is also a major threat.
“We do a significant amount of export business around the world and currently benefit from tariff-free access to the European Union as well as to the Japanese market which is very important to us,” Simon Cotton said.
“We are hopeful that agreements will be reached which allow us to continue to trade without duties to these important markets.”
Established over 200 years ago, the knitwear manufacturer has a flagship store on London’s Now Bond Street and retail spaces in Elgin, St Andrews and Hawick. A store in Nantucket, US, closed at the end of 2019.
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