UK's Paul Smith sees FY operating profits dive by 41.8%

By

Cajsa Lykke Carlson

Published
Jan 26, 2016

Paul Smith, the British fashion brand that has been a fixture on the UK fashion scene for the last 40 years, reported a 41.8% decline in operating profits after exceptional items, down to £979,000, in the year ended June 30, 2015. Overall company turnover fell 8.7%.

This was due to the company's investment in restructuring, as it prepares to launch two new collections, the "Paul Smith" first line and "PS by Paul Smith" second line for men and women, this autumn. It said: "In response to changes in our market and to ready ourselves for this realignment of our collections we have taken the opportunity to invest and the company has undertaken a reorganisation of design teams, products and collections."

Retail sales also fell in the period, down by 3.6% overall and 3% on a like-for-like basis. Paul Smith said this reflected a mixed performance in the core UK and Italian markets, as well as the temporary closure of the brand's Heathrow Terminal 5 shop during relocation.

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However, e-commerce sales rose a "pleasing" 12% and the company said it will continue to invest in and develop the site to promote growth. Wholesale sales declined by 11%, and Paul Smith said all major distribution channels are being reviewed in anticipation of its new collection structure, which is expected to stabilise sales in the coming years.

Paul Smith explained that it expects sales to increase as it refreshes and clarifies its offer and introduces a new interpretation of the classic Paul Smith range. "The directors consider the result for the year to be satisfactory given the period of transition, investment and reinvention,” the company stated.