Paul Smith Limited continues to face challenges as a result of the ongoing pandemic, according to its latest financial reports. The company experienced a 17% decrease in turnover in the 12 months ending June 2021, joining many other retailers in feeling the impact of the global health crisis. However, the pandemic is not the only factor affecting Paul Smith’s performance. Brexit has also played a role in the decline of turnover, with additional costs of carriage and duties, as well as changes in retail sales mix during the sales period, contributing to a decrease from £148.9 million to £123.8 million.
The consequences of these challenges are evident in the company’s operating losses, which increased to £24.3 million from £15.5 million due to significant exceptional costs. Retail sales saw an overall decline of 18% in the latest year, with an 11% decrease on a like-for-like basis. Store closures during lockdown periods and reduced footfall have been major contributors to this decline. The decline in travel and tourism has also impacted footfall in key stores. As a result, the AW20 season experienced a 35% decrease in retail sales compared to the previous year, while the SS21 season saw a 36% increase compared to the heavily impacted SS20 season but still had a 35% decrease on a like-for-like basis compared to the pre-pandemic SS19 season.
Despite these challenges, Paul Smith has seen improvements in footfall, with retail sales for the AW21 season currently at 89% of pre-pandemic levels on a like-for-like basis. Notably, e-commerce sales have played a significant role in driving growth during this time, experiencing a 65% increase compared to AW19. Direct e-commerce sales now make up 66% of the brand’s total retail sales, a significant jump from the previous year’s 31%. The company expects a gradual return to more normal retail patterns in the future but also anticipates the momentum in e-commerce to continue based on current trends and their investments in the digital space.
Wholesale trade with franchise partners, department stores, selected multibrand shops, and online retailers globally saw a modest decline of 8% in the latest year, totaling £74.9 million. The wholesale business has remained resilient and performed well in terms of deliveries and sell-through. Orders confirmed since the end of the year for the new SS21 season have increased by 49% compared to the previous season and are only 2% lower than the pre-pandemic SS19 period.
Despite the challenges posed by the pandemic, Paul Smith has managed to navigate the storm by leveraging its e-commerce capabilities and maintaining a strong wholesale presence. The company remains optimistic about its ability to recover and adapt to the changing retail landscape.
For more information on Paul Smith’s financial reports, click here. To learn about the brand’s e-commerce growth, click here.
