Kurt Geiger sales, profits rise, but are tougher times ahead?
Footwear specialist Kurt Geiger performed strongly in its latest financial year although the company’s (admittedly brief) results filing looks at face value as though sales fell. But that's only because its latest period covered 12 months while the earlier comparable period was 13 months long.
In the 12 months to January 27, turnover was £324.58 million, compared to £337.65 million in the previous ‘year’. But with the earlier year’s extra month stripped out, it looks like growth was more than 4%, which is better than the UK market overall, despite the previous year having also been a strong one.
The company’s operating profit was £24.6 million in the latest period, a noticeable improvement compared to the £20.59 million in the 13 months.
It all adds up to a company in good health, but analysts are concerned that its dependence on department stores could have held it back this year and could continue to do so in the months ahead.
Sofie Willmott, Senior Retail Analyst at GlobalData, said that when making a like-for-like comparison, “GlobalData estimates revenue growth of 4.2%, meaning that Kurt Geiger once again outperformed UK footwear growth, despite being up against strong figures. Operating profit rose to £24.6m, generating an operating margin of 7.6% versus 6.5% last year (for the 13-month period).”
She added that “the retailer’s reputation for high quality, stylish footwear and accessories has enabled it to remain appealing, despite increased competition at the value end of the market and from luxury retailers, like Gucci and Givenchy, which have been expanding their trainer offer.”
The two extreme price levels she’s comparing the company to are both relevant here because of the wider offer it sells covering both designer-level prices and low-cost items. In fact, GlobalData’s 10,000-respondent How Britain Shops survey showed 15.2% of Kurt Geiger shoppers also bought footwear from Primark.
But regardless of its strength up to January, Willmott also thinks that Kurt Geiger is “likely to have suffered since, considering its reliance on department store retailers.”
The luxury department stores in which the company operates, such as Harrods and Selfridges, may have gone from strength to strength, but the mass of mid-market UK department stores have been struggling this year as the endless stream of negative headlines around some of the sector's biggest names has shown.
What is encouraging is that the company isn't only looking at the UK market and is also linking up with major US Department stores such as Nordstrom, Bloomingdale’s and Dillard’s. That said, there's no denying that these American giants also have their challenges so the company needs to tread carefully as it forges ahead with its expansion plans.
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