Published
Apr 14, 2020
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Brand Architekts stays strong, handcare surges but male shaving falls

Published
Apr 14, 2020

Beauty brands business Brand Architekts Group released an update on Tuesday in which it talked about its “strong financial and liquidity position” and how most of its retail customers continue to trade.


Handcare products have surged for Brand Architekts but male shaving is down



The company’s “balance sheet remains strong and our available cash balance is  £20.1 million with a net cash position (including outstanding term loans) of £17.8m, with no material capital expenditure programme to support,” it said. 

The company is in the fortunate position that its customer base is made up of major retailers, the vast majority of which continue to trade and which “for the most part, are experiencing strong cash inflows even through lockdown”.

In fact, over 90% of its bricks and mortar sales are through grocery and pharmacy retailers. “Our products continue to be available for consumers to buy” through those stores, it explained. But it added that it’s seeing “fluctuating patterns of sales in response to varying store footfall and in-store operational focus, including changes to in-store promotional activities”.

It also noted “differences in sales patterns across different product types”. Sale volumes of handcare products have “increased significantly and we have been able to secure extra supply to support retailer demand whereas, for example, sales of male haircare and shaving products have, unsurprisingly, declined significantly in recent weeks”.

But even with many stores still open, within its international business, a number of its general merchandise and department store customers have temporarily closed their doors, which is understandably likely to hurt its sales through those channels while lockdowns are maintained.

But to help make up for this, online sales, both through large e-tailers and its own branded websites, “have increased significantly and we have stepped up promotional activity to capitalise on this route to market”.

That said, the impact of the Covid-19 situation has resulted in “a significant reduction to the group's overall sales volumes”. However, it does remain “a very fluid situation and we are focused on identifying and securing incremental opportunities as well as managing situations of demand reduction,” the company added.

It also said it’s “taking all necessary steps to ensure the health and well-being of our employees, clients and suppliers”. All of its team are now working from home and all its operational systems and processes “are working well on a remote basis as are internal and external day-to-day communications”.

As far as the supply chain is concerned, six out of its seven UK-based suppliers “remain fully operational and all of its suppliers based in China have now returned to normal operation. The company said it “has confirmed volumes for its two largest Christmas gift customers and [is] working through the associated supply plans with our Chinese partners”.

While all of that is generally good news, the company still realises it needs to hold on to as much cash as it can so it has undertaken a number of short-term reductions in its discretionary expenditure. As part of this, it has also secured a short-term suspension of rent payments on its offices in Teddington.

The company has a relatively small number of directly-employed staff but it said it has postponed filling a number of current vacant positions and the directors are taking 20% pay cut until the end of the year. It’s also not paying a dividend this year.

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