Smythson sales rise but it swings back to losses, says US growing fast
Luxury leather goods and stationery retailer Smythson has filed its accounts for the year to March 2022 and they showed an increase in turnover from £16.9 million to £20.6 million.
But gross profit as a percentage was down to 59.5% from 59.9% and EBITDA was a loss of £7.3 million compared to a profit of £3.1 million in the previous year. It had also made an EBITDA loss the year before that of £5.2 million.
The company made a pre-tax and post-tax loss of £8.5 million compared to a profit of £1.9 million in the previous 12 months. Two years ago, it had also made a net loss of £6.4 million.
The latest losses came as the company said the challenges it had seen in 2020 because of Covid continued into 2021 with stores in the UK remaining shut through the first trading period of the year.
However, once life began to edge back to normal, consumer confidence and a desire to return to physical shopping “surpassed our expectation and resulted in a strong retail performance in the second part of the financial year,” the company added.
It also said it's continuing to work on refining its retail network, “exiting unprofitable stores to create a more stable base of overheads and to enable effort and investment to be concentrated on growing brand visibility, its digital channel, expanding its presence in key markets and investing in product development and marketing”. What that meant during 2022 was that its stores at Royal Exchange and Bicester ceased to trade.
Smythson added that the “extraordinary” market-wide growth of e-commerce in the previous financial year inevitably slowed in the latest period as customers once again had the option to shop in-store and to return to more normal spending habits. That said, its digital growth vs the pre pandemic year was still over 30% – or more than £3 million – and was level year on year in the strategically key US territory. This was driven by a 26% increase in conversion.
And since April 2022 it has onboarded a new creative agency and a new media buying agency, which has already driven value in its expansion territory of the US, where it’s seeing year-to-date growth of over 12%.
Smythson didn’t offer a timeline as to when it would be likely to get back to profitability, but it did say that the directors are “confident that, in the longer term, the business will deliver sustainable sales growth” and that its ultimate parent company has confirmed its commitment to providing financial support
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