LK Bennett makes loss, but is upbeat for future
LK Bennett has filed its latest results at Companies House and while they only cover the 12 months to February last year, they did include some information about how it has fared in the Covid-hit environment since then.
The company went through some big upheavals in 2019/20 with an administration filing, a sale to Rebecca Feng’s Byland (its Chinese franchise partner), a CVA and some store closures.
In its results report, the company said the lockdown that began in March last year meant all of its stores had to shut temporarily, but it sourced a loan through Byland Investments in the same month and so was able to continue trading.
It improved its e-commerce platform and has worked with new partners this year, but said that only a certain amount of lost sales were made up through the online channel, causing an unspecified drop in turnover this year. The company has also been offering more relaxed clothing in its SS21 range in response to changing consumer behaviour and continues to adjust its collections "where necessary".
The company seemed to have weathered the first lockdown, but the CVA last year was caused by the announcement of a second UK lockdown in the autumn. That CVA gained approval from creditors and in January this year, the company secured an asset-backed lending facility. It said this will allow it to “invest in the future and grow back to its pre-Covid-19 levels over a conservative tine period”.
So how exactly did it fare in the pre-Covid period? The timing of its results report is significant given that in the 12 months up to February 2020, it's a clear example of just what normal trading should look like with no element of the pandemic affecting its UK operations, although the Chinese ops would have been hit back then given that it was the first country to introduce lockdown measures.
Unfortunately, it didn’t break out the detail of domestic and international trading. But what comes through clearly from the losses it made is that the company was facing major challenges even before the pandemic. It achieved turnover of £41.4 million in the period, although it gave no comparisons given the buyout that happened in April 2019.
Gross profit in that year was £23.8 million with a gross margin percentage of 57.9%. However, EBITDA after exceptional items added up to a loss of £600,000. The group reported an operating loss of £3 million excluding £1.4 million of largely positive exceptional items. These exceptionals were the creation of the new company and the stock margin gain from the purchase of the assets. But net losses for the company were £2.3 million.
In the results, the company acknowledged that the brand has faced multiple challenges in recent years given the administration filing and the CVA. But it said the business is “moving swiftly to ensure that the brand is seen as highly regarded with high standards and excellent quality”. Part of this move is an updated logo “showing the evolution of the brand to a sleek, newer level of sophistication”. This was originally due to be launched in 2020, but was put back to this year given what was happening due to the pandemic.
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