Paul Smith sales and profits rise, SS20 season is off to good start
Paul Smith sales rose by a healthy high-single-digit percentage in the company's latest year and a key profit measure surged by over 70% with the reception for its collections improving season by season. It was good news for the company and showed that its restructuring of a couple of years ago was the right thing to do.
Turnover in the year to the end of June 2019 rose 8.9% to £214.9 million and operating profit leapt 72% to £5.73 million from £3.3 million. Gross profit rose to £123 million from £108 million and the final profit figure (when tax, cash flow hedges and other issues were taken into account) was £2.77 million. That’s not exactly a huge figure, but it’s an advance on the prior year’s £2.32 million.
It came as retail sales were up 14% and like-for-like sales advanced by a healthy 6% on the back of a positive performance across most of its core markets. This was despite lower footfall in many of its shops, as well as disruption to retail in France due to the yellow vest demonstrations in Paris.
But while footfall was down, the company’s online operations continued to attract more customers. E-tail benefited from continued investments in its omnichannel offering, as well as increased digital marketing. E-commerce sales rose 12% and took a further step forward as they represented 24% of the retail sales total, up from 23% a year earlier.
The company also said that wholesale and sales to franchise partners didn’t rise quite so strongly, but a 4.8% increase to £79.9 million was nonetheless a good result.
Also encouraging was news was that the firm’s retail sales performance has continued well since the year end and interest in its collections each season seems to be growing. Spring/summer 2019 orders were up 8% on the previous spring/summer season and autumn/winter 2019 orders rose 9% year-on-year. Meanwhile forward orders confirmed since the year-end for spring/summer 2020 are up 10%, so we can see a clear line of progress there.
The company said its costs also rose during the year but that reflected “continue investment in new shops, business systems and promotional activities”. In fact, Paul Smith opened two new London stores (Bow Lane and Coal Drops Yard in King’s Cross) during the period and also opened in Munich and Copenhagen, as well as debuting an outlet store in California.
And it added that since taking back control of it shops in Hong Kong and China, it's pleased with the progress of both retail and wholesale channels there as it has increased its presence and brand recognition in the region.
It all means the company is relatively upbeat for the future. Without underestimating “the challenges in our market, we have returned to a trend of growth and continue to build on the strong foundation resulting from our significant efforts and investments,” it said. “Based on current levels of trade, and subject to an orderly Brexit, we expect another positive outcome for the coming year.”
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