Vivienne Westwood sales, profits rise, stays confident despite tough times
Vivienne Westwood Limited reported its full-year results for 2019 this week and while the figures pre-date the current crisis, the company seems confident that it has the strength to continue, despite saying that Covid-19 had a “profound impact”.
And the results do show that the business was faring better in 2019 in the more normal pre-Covid circumstances than it had been in earlier years.
It said turnover rose from £38.7 million in 2018 to £46.3 million last year and its gross profit margin edged up to 53.8% from 53.5%. It made a pre-tax profit of £2.7 million, which was much better than the pre-tax loss of £2.5 million in 2018 (and better than either of its pre-tax profits in 2017 and 2016). The final profit for the year was £1.8 3 million, compared to a loss of £4.8 million a year earlier.
The company, which is one of relatively few independent fashion businesses within the international arena, said 2019 still proved to be a challenging year, despite the improved results.
It pointed out that cash flow from operations plummeted in 2019, partly due to a marketing contribution to related parties. However, there were some "very positive signs” as the figures in the results report show. The 19% turnover rise was encouraging and an increase in retail sales of 10%, plus wholesale rising 59%, were also good. That said, the cost of sales increased by 19%, which is why the gross margin rise was only small.
And the company added that margins are still under pressure "due to the nature of wider retail conditions". It has been focusing on alleviating this pressure "by reviewing pricing to improve gross profit margins and this policy will continue on an ongoing basis”.
Most of Vivienne Westwood’s business is conducted through physical retail stores and wholesale, but it said that it continues to invest in the development of its website in order to "better convey the brand message and improve the customer journey to boost online sales". Its marketing drive is also designed to push more business to its website.
The company also said that it has adequate resources to continue but admitted that it had "experienced the profound impact of the Covid-19 pandemic” earlier this year. Although the lasting extent of the impact is still uncertain, the company has been able to keep trading online and has retained all of its employees, partly due to its overall strength and UK government job retention measures. It said it believes "its cash reserves and careful cash flow management will mitigate any major repercussions”.
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