In 2020, British fashion brand Stella McCartney experienced a significant loss as a result of the COVID-19 pandemic. Sales dropped from £38.6 million to £28.4 million, and even further to £23.8 million when excluding transactions with fellow group companies. Gross profit also saw a decrease from £26.7 million to £20.3 million. The company reported a pre-tax loss of £31.4 million, although it was an improvement from the previous year’s loss of £33.4 million.
Despite the challenges posed by the pandemic, Stella McCartney has started to see a recovery in sales in 2021, aligning with its expectations. However, specific monetary figures for this year’s trading performance were not mentioned. The brand’s goal for 2021 is to increase sales by 4% in euros compared to the previous year and significantly reduce the operating loss.
In 2020, Stella McCartney experienced a 26% decline in revenue, a higher percentage compared to the 9% decline in the previous year. However, the operating loss actually narrowed from £32.4 million to £29 million due to decreased costs of sales. The net loss for the company in 2020 was £30.4 million, a slight improvement from the previous year’s loss of £33.4 million.
The significant changes that the company underwent in recent years, including severing ties with Kering and partnering with LVMH, need to be considered. In 2018, Stella McCartney bought out Kering’s half share in her business and signed a deal with LVMH in the second half of 2019, retaining majority ownership. However, these changes coincided with the onset of the pandemic, causing delays in development and growth.
Despite the challenges faced, Stella McCartney utilized the crisis as an opportunity to enhance its operations. The company accelerated its digital and physical transformation strategy, resulting in a significant increase in digital sales. Additionally, it focused on improving customer service through local clienteling and finding innovative ways to meet customer needs. The brand also exited its Yoox Net-a-Porter (YNAP) webstore partnership and migrated its business to Stella McCartney Italia SRL, which was launched in April 2021. Further technological advancements, such as the implementation of new ERP technology, are set to take place in the middle of next year.
Looking ahead, Stella McCartney acknowledges that the outlook for 2021 remains uncertain due to the ongoing global health and economic context. However, the company remains committed to adapting and serving its customers’ needs.
In 2020, Stella McCartney also underwent significant changes in leadership, setting the stage for future growth. The majority of leadership roles were renewed, including the appointment of a new CEO, COO, marketing chief, sales director, and CFO. This new team formulated a strategy aimed at reestablishing desirability for the brand and attracting a new generation of customers. Noteworthy initiatives included the A to Z campaign launched in November 2020, which introduced iconic items and implemented a comprehensive marketing plan.
Furthermore, the brand took measures to establish sustainable foundations during 2020. This included discontinuing its menswear line, finalizing a partnership with Simonetta for licensed kidswear, transforming the Ready to Wear supply chain, reducing directly operated store numbers (closing its Fulham Road store while keeping its Bond Street flagship and Bicester Village outlet), and controlling costs. Stella McCartney also expanded its partnerships with ISA, Adidas, and Thelios for eyewear.
Brexit is not expected to have a significant impact on the brand, as less than 5% of its global revenue relies on UK physical stores that depend on the cross-border movement of goods. The majority of Stella McCartney’s goods are of preferential origin, produced within the EU or UK. Most foreign revenue is generated through royalties and profit share, which are safeguarded by UK international tax treaties unaffected by Brexit.
Overall, while Stella McCartney faced challenges and losses in 2020 due to the pandemic, the brand has taken proactive steps to adapt, recover, and position itself for future growth. With a renewed leadership team, strategic initiatives, and a focus on sustainability, Stella McCartney aims to navigate the uncertainties of the global landscape and continue serving its customers effectively.
Useful links:
– Stella McCartney Progress Report 2020
– Vogue Business: Stella McCartney records annual loss despite positive 2021 outlook
