Blue Inc losses continue
Struggling fashion retailer Blue Inc continues to be loss-making despite being granted a CVA by more than 80% of its creditors.
The company disclosed losses of £2.6 million in a year to 1 July, a figure that certainly benefited from a write down of £9 million liked to the CVA. Excluding the gain on CVA creditors and other exceptional items, the company’s loss was £10.9 million.
The brand had struggled to cope with the lack of consumer confidence following Brexit, the extremely competitive trading environment on the high street, high property costs and changing consumer habits. It entered into the company voluntary agreement in March 2017, a move that allowed it to cut its debts and rent, and close underperforming stores.
This led to the closure of 57 stores, reductions in headcount at its head office, relocation of its headquarters and the outsourcing of its logistics and distribution.
The company said turnover for the year soared to £49.7 million, up from £23.4m a year earlier. Gross profit was £22.5 million, compared with £11.9 million in 2016, and gross profit margin fell slightly to 45.3% from 51.1%.
Its working capital resources were improved following £2.6 million equity injections from shareholders Uniserve Holding Ltd and Padma Textiles Ltd.
However, management remains cautious moving forward. The company said in a report submitted to Companies House: “The economic outlook for the high street retail sector continues to remain challenging as sales will continue to be affected by downward pressures on both volumes and pricing, whilst overhead costs remained fixed.
“Over the fourth quarter of 2017 and first quarter of 2018 a number of high street retailers continue to experience financial distress. Despite the challenging conditions it is the directors’ expectations that the company will continue to comply with the obligations under the CVA.”
Blue Inc is not the only British retailer feeling the impact of a series of economic pressures. Jaeger collapsed into administration in April 2017, followed by East in January this year. Meanwhile, New Look announced a CVA in March.
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