Kurt Geiger sales, profits rose pre-crisis, stays upbeat despite pandemic
Kurt geiger has filed its accounts for the year to February 2020 and reported a record performance, with sales up 3.7% to £347 million. It said this was pleasing in light of the wider subdued retail trading environment pre-pandemic.
The company continued to grow its wholesale own-brand business during the period, following the successful launch in the US in the previous year, and it said that extending its range distribution with several partners was also a crucial factor in its growth. It managed to secure new distribution partners in both the US and Europe towards the latter part of the year and the business achieved sales growth in this channel of 34.9%.
It also managed retail growth in the difficult market with total like-for-like sales 3% higher and “a stronger level of growth in Kurt Geiger-fronted facias of 7.2% on a multichannel basis”.
And as far as products are concerned, it saw its fastest growth in sneakers and handbags, which were up 35% and 20% respectively. In fact, by the end of that financial year, handbags accounted for 20% of the company's own-brand sales.
So what does this translate to in terms of profits? Earnings on an EBITDA basis rose 11.5% to £40.2 million. Operating profit rose 22% to £29.7 million, when one-off international expansion costs and costs linked to the launch of a new warehouse management system were included. Profit after tax rose to £32.6 million from £27.6 million.
The company was clearly in a good place as that financial year ended having further reduced its debt and with cash reserves of £18.1 million. That meant it was in a strong position when the Covid-19 pandemic hit after the period ended.
It didn't give any figures for how it has fared since then, however. But it did say that it's committed “to emerging from the pandemic a stronger and more meaningful brand that has close the connections to our much valued customers, employees and suppliers”. And given that it more-than-doubled its charitable contributions in the last year and expects to increase them further in the current year too, this suggests that it’s one company not on the ropes at present.
Its strong position has been helped it focusing heavily on its liquidity and it has taken advantage of government initiatives such as the Job Retention Scheme that pays the bulk of the salaries of furloughed workers. It also has unused bank facilities of £30 million and its major shareholder has committed to providing additional support if needed.
But the pandemic has clearly slowed down its expansion plans that had included growing its wholesale business with partners such as Nordstrom, Dillards, Zalando and Zappos, men’s footwear expansion in Harrods as part of that store’s £300 million refurbishment plan, opening more Carvela stores after its successful Westfield London debut, and further growth in handbags. Its growth plans for sneakers may have been helped by consumers' 2020 focus on more casual footwear, however.
One other aspect of its growth strategy that's unlikely to have been hurt too much by the past year’s events is its focus on digital growth, particularly from its Kurt Geiger and Shoeaholics branded webstores. This follows like-for-like growth of 16.2% in its previous financial year.
Unfortunately, the company didn’t give any specific figures about the financial year that ends this month. But it did say that FY21 revenue and profitability will be “materially impacted" by the consequences of the pandemic, even though the firm’s digital platforms have continued to operate uninterrupted during periods of store closures.
It also said that in the year ahead, it will continue “to pursue a strategic plan, developing our brand are offering our partnerships and platforms to customers”.
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