Deichmann’s UK arm swings to a loss as discounting takes toll
Expanding shoe retailer Deichmann is on a mission to grow its UK footprint despite posting a pre-tax loss of £1.4 million in 2018.
Its latest accounts released on Thursday revealed that the brand, endorsed by British singer and songwriter Rita Ora, opened nine new stores across the UK last year, bringing the total number of locations to 102.
This helped it record a 3.5% increase in sales in 2018, growing to £98.1 million from £94.7 million a year earlier. And with more new stores planned, Deichmann is expecting to see a further sales growth this 2019.
But it wasn’t all smooth sailing for the German business last year, as a drop in exchange rates and higher levels of discounting to clear excess stock caused a drop in the gross margin. This, coupled with a fixed asset impairment, made the company fall into the red with a pre-tax loss of £1.4 million from a pre-tax profit of £0.33 million in 2017.
However, management remains upbeat about the brand’s prospects in the UK, saying that the company’s policies on stock holding and currency hedging will adequately protect it from any Brexit concerns.
Deichmann has opened hundreds of stores in the UK since the launch of its first branch in the country in 2001. Britain remains one of the retailer’s largest markets after Germany, where it operates over 1,400 stores.
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