Whistles sales and profits rise as it opens new stores
The latest results from contemporary womenswear retailer Whistles show the company is continuing to grow and its store expansion is helping to drive sales higher.
Accounts filed at Companies House for the year to the end of March showed turnover rising 7.1% from £68.5 million up to £73.4 million. And its adjusted EBITDA, its main indicator of profitability, rose from £4.5 million to £5.4 million. However profit after tax fell quite sharply to £1.9 million, having been £3.6 million a year earlier, although this fall included the impact of exceptional items.
Sales growth, while slower than the 16.1% achieved in the previous year, was still respectable given the market conditions in the UK of late. It was driven by seven new shop openings and 22 new concessions, alongside growth through its online channels. In fact, its total e-tail, sales for the year accounted for 38.2% of its turnover, up from 36.1% a year earlier. The company is also expanding abroad and opened its first standalone in the US in October 2018.
The company said it saw “challenging retail trading conditions” during the latest year, but it was pleased to see the 18% growth in its EBITDA figure.
Not that everything was perfect and it said its gross margin fell to 63.1% from 64.1%, impacted by one-offs and the effects of foreign exchange exposure.
The company also said that its distribution and selling costs rose 3.8% in the latest period, driven by increased fixed costs from those new store and concession openings, alongside that growth in e-commerce sales. Even though it closed three stores and four concessions, the overall increase in both added to costs, although as a percentage of sales, distribution and selling costs were lower this time. At the end of its financial year, it operated 51 standalone stores in the UK, 106 concessions in department stores and eight online channels.
So what did analysts think of the results? GlobalData’s Pippa Stevens said: "Its fashionable-yet-classic ranges successfully appeal to 25-44s, enabling it to justify its premium price points and providing it with opportunity to steal shoppers from Ted Baker, which has suffered from waning popularity in 2019”.
But she added that “Whistles must be careful that its regular promotions, such as its 30% Black Friday discount, do not devalue its full-price proposition and negatively affect shoppers’ brand perceptions”.
The retailer announced in February that it was axing its menswear offer, making its AW18 collection its last, highlighting its failure to win over male shoppers and Stevens said that “with its sole focus now on womenswear, Whistles must better promote its ranges on social media with more frequent and engaging posts, and increase its use of influencer marketing to drive top-of-mind appeal”.
She also thinks the latest results were likely to have been impacted by its association with House of Fraser, which fell into administration in August 2018. She said it should “strengthen its partnerships with more premium department stores, such as John Lewis and Selfridges, as well as with third-party platforms like Asos and Next, by providing them with a broader selection of products, including more exclusive options”.
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