Victoria Beckham losses widen as sales fall, but are profits looming?
Victoria Beckham’s fashion and burgeoning beauty business may be making a major impact in terms of the publicity her global fame virtually guarantees, but her company remains loss-making and the latest accounts, for 2018, show that its losses widened last year as sales fell.
The business reported a pre-tax loss of £12.3 million, which was its 11th consecutive year of losses, on the back of sales down 16% to £35.1 million. The operating loss was 18% wider at £11.7 million and the net loss was £12.3 million too, having grown from £10.3 million in 2017.
The wider losses came as the firm took fewer wholesale orders internationally. It seems that wholesale saw double-digit growth in the UK, but "current challenges affecting department store retail resulted in a decline in key international markets”.
The company, which is controlled by Beckham Brand Holdings and chaired by industry heavyweight Ralph Toledano, launched in 2008 with a small collection of dresses. But her business empire now also comprises the main label and the Victoria by Victoria Beckham brand, plus accessories, as well as the new beauty business.
The company said that while its revenues and profits were down last year, "the business performed in line with shareholders’ expectations by cutting costs, focusing on its digital channels and refining the products to more closely reflect Victoria Beckham's aesthetics and values”.
2018 was the first full year after the company got a cash injection from Neo Investment Partners (which is a minority investor) in a deal said to value the firm at £100 million. And in late 2017 when the deal was announced, the company had said it would help its digital growth.
And that seems to have happened with the firm's new accounts saying that its main focus last year was growing its digital channels by investing in new platforms through Shopify, and partnerships with Farfetch and Global E, "to improve the customer experience on international sites, enabling the business to distribute to over 120 countries”.
2018 was also the first full year of Victoria Beckham Limited’s long-term license deal with Reebok, "reflecting Victoria’s lifestyle ambitions and introducing the brand to a wider global audience". And in the last quarter of the year, the company also signed a new collaboration with Marchon Eyewear, which should boost sales in the future.
While the results covered the 2018 calendar year, the company also included some updates for 2019 and said that its new strategy "has enabled sales increases in certain segments as well as a significant reduction in losses”.
It’s expecting to deliver “a profitable Q4 EBITDA” driven by double-digit growth for both of its direct-to-consumer channels, an increased SS20 order book in wholesale, that eyewear license income, and a reduction in costs year-on-year.
And it also said that it's pleased with the momentum of the business following the launch of Victoria Beckham Beauty and the positive reception to its SS20 catwalk show.
The former pop star has always insisted that her company isn’t simply a vanity project and, given that it’s more than a decade old now and has attracted an executive of Toledano’s status, we have to take her at her word.
It will be interesting to see the next set of results this time next year given the initiatives that are under way at present and that tantalising claim that it will see profitable Q4 EBITDA.
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