Radley London hits recovery trail, US expansion is key
Accessories specialist Radley London has seen a post-pandemic recovery as sales have surged in both the UK and US. That’s good news after lockdown store closures and lifestyle changes meant sales dropped 34% in the year to the end of last April.
In a Companies House filing, it said its sales in that year were down to £48.7 million from £73.5 million and underlying profit was £2.8 million, but that was an improvement on the prior year’s £0.2 million.
CEO Justin Stead is upbeat and in the notes accompanying the accounts filing said the company has bounced back since then “more strongly than anticipated [with] strong growth being delivered across a significantly reshaped store base, our existing and new digital channels, across our wholesale partners and internationally, particularly the USA”. That optimism certainly looks justified as he said sales have risen 47% in the first half of the current financial year.
Part of that was based on the recovering retail sector and the end of work-from-home orders. But part of it was also about a rationalised business after the company closed 15 stores during the pandemic (mainly full-price stores), leaving it with 25 UK shops, many of them outlet locations. The firm’s concessions business continues and has remained profitable.
In the year to last April, Radley said that its UK retail estate accounted for 27% of its sales, compared to 47% in 2020.
Alongside the closures, the company has focused more on selling online (it sells in 43 countries globally) and also on full-price sales. Sales through Radley websites were up 38% year-on-year in the 12 months to April as the company may have paused most capex projects but its “crucial web re-platform project” was prioritised. It also launched the brand on Amazon with “a carefully curated assortment suitable to this channel in both the UK and USA” in autumn 2020.
It’s targeting the US market more actively as it currently accounts for around a quarter of its sales and Stead believes it could be larger than the UK market for the brand well before the end of the decade.
In the year being reported on, Radley said the US wholesale business “recovered well” with the company adding that sales for the region as a whole were actually ahead of the previous year at £9.3 million, up from £7.2 million. Radley has recently opened two stores in the US in high footfall malls in Las Vegas and California and said that early trading signs are very encouraging. If this continues, it will look to expand its retail footprint in the country.The company also launched with a new Canadian partner in May last year.
In the year it was reporting on, Radley USA LLC accounted for 16% of all external group sales and the US was described as a “key strategic growth market”.
But the company is also targeting Asia, even though this is a smaller market for now. In the year in question, Radley China Limited (which sells to customers via digital platforms) contributed 3% to all external group sales.
It's also in discussions with a local distribution partner to take its China business forward, both on existing digital channels and into physical spaces. Plus it's launching with a new distributor in South Korea in the current financial year.
Looking more generally, the company has some challenges to face at present. One is price rises. Radley will raise its prices but Stead has said that its rises will be less than those of its peers with increase of between 4% and 8%.
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