Textile wholesaler and retailer Leeds Group has a difficult year
It’s been another tough year for Leeds Group and Covid-19 continues to be the culprit. While many British businesses are slowly exiting the effects of the pandemic, UK-based-but-Germany-focused fabrics specialist’s recovery is still some way off.
Deeper Covid restrictions in Germany in the spring continued to hold back the textiles and haberdashery firm, turning it into “another challenging year”, it said Monday.
Despite some initial signs of first-half improvements, further countrywide restrictions imposed by the German government “had adversely affected trading activity in the second half of the financial year”, noted non-executive chairman Jan G Holmstrom in the company’s final results for the year to 31 May.
Both its Hemmers and KMR German-based operations have accordingly suffered. Hemmers’ wholesale business was also affected by lockdowns in its export markets “although trading continued on a reduced basis”, it said.
However, all KMR's retail stores were fully closed during the country-wide lockdowns which lasted until early March, with some stores remaining closed until the end of May due to localised lockdowns.
The effect of the KMR store closures were partly mitigated by actions taken by management and by government financial aid, it noted.
And, of course, despite the lifting of lockdowns, sales suffered. Total group revenue for the continuing operations in the year slipped to £33 million from £35 million in fiscal 2020.
The Hemmers arm saw sales slightly higher than last year (£27.7 million, compared to £27 million) due to currency exchange effects “as sales volumes were in line with previous years but lower than expectations”.
But most of the damage was done at its KMR retail arm where lockdowns drove sales “significantly lower”, falling to £5.34 million from £8 million in the year-ago period.
And earnings? Although the German government provided almost £1 million in financial support to the group, “the reduced sales figures did not generate enough contribution to cover the fixed overheads and, therefore, both Hemmers and KMR made a loss after interest”, it said.
That translates to a loss of £280,000, although this was an improvement on the £1.75 million loss in 2020. The group's loss before tax from continuing activities was also cut to £508,000 from a loss of £2 million previously.
However, now with a “stronger management team” in place and a restructure to align its costs with sales activity, the group’s expecting a return “to acceptable levels of profit in future years, assuming a return to a normal trading environment”, added Holmstrom.
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