The Paul Smith brand has managed to recover from the impact of the pandemic, with sales bouncing back and resulting in a narrowing of losses. The company attributes its recovery to the actions taken during the Covid crisis and the increasing demand for its products. Both store and e-commerce sales have shown steady growth, with e-commerce becoming a significant channel for the business. Each season since the easing of restrictions has been a positive progression, with certain metrics even surpassing pre-pandemic levels.
The financial figures for Paul Smith Group Holdings Limited, the parent company of all Paul Smith activities, demonstrate a strong recovery. However, the company acknowledges ongoing challenges such as rising inflation and low consumer confidence, which affect the retail industry as a whole.
During the financial year, group turnover increased by 22% to £197.35 million. The gross margin has improved due to higher volumes, increased stock efficiencies, and more sales at full price as pandemic restrictions were lifted. Gross profit reached £99.2 million, a significant improvement compared to £77.9 million in the previous year. The operating profit before exceptional items was £5.6 million, a notable improvement over the £3.1 million loss in the previous period. Taking exceptional costs into account, the operating profit was slightly over £4 million, a positive outcome compared to the £12.1 million operating loss the year before. Although the company experienced a net loss of £3.6 million for the year, it is significantly lower than the £18.8 million loss in the previous 12 months. Overall, the company ended the year with a strong cash position.
Looking at the retail sales figures in more detail, there has been an overall increase of 35% for the year, with a like-for-like increase of 41%. This growth can be attributed to the increasing footfall as shops were open for most of the period. Retail sales for the AW21 season increased by 36% compared to the previous autumn/winter season and rose 35% on a like-for-like basis. However, they were still 6% lower than the pre-pandemic autumn season. The SS22 season saw a healthy increase of 49% compared to the previous year and a like-for-like increase of 41%. Notably, they were also up 1% compared to SS19. The company has observed improvements in footfall, with retail sales for AW22 up 11% compared to the previous year, although down 5% on a like-for-like basis compared to AW19. Despite this, e-commerce sales have increased by 47% compared to AW19, showcasing the success of the company’s online selling investments during the pandemic. Direct e-commerce sales accounted for 34% of total retail sales, a decrease from the 51% in the previous year when shops were largely closed.
The company views e-commerce as a major channel for its business, and it expects to maintain momentum based on current trends and investments in digital capabilities and marketing. The tailoring categories have shown encouraging signs of growth, and larger shops have witnessed increased footfall as customers return to city centers. As part of its strategic moves, the company has closed one store each in Birmingham, UK and Paris, France, while opening a new location in Williamsburg, New York, and relocating one in Hong Kong.
In terms of wholesale, Paul Smith experienced a recovery with sales to franchise partners, department stores, multi-brand shops, and e-tailers globally increasing by 12% to £82.6 million. The wholesale business has shown resilience throughout the pandemic, performing well in terms of deliveries and sell-through. Forward orders for SS23 have increased by 4% compared to SS22, even surpassing the levels of SS20, which was the last forward order season before the pandemic.
Although the recovery has been uneven across different geographical regions, the company has effectively managed its stock levels despite uncertain demand. The Paul Smith brand looks toward the future with optimism, maintaining its focus on e-commerce, digital capabilities, and investments in its stores and wholesale partnerships.
Links:
– Paul Smith Official Website
– Article Link
