Fashion group Paul Smith on Thursday reported tumbling full-year turnover as its largest channel, wholesale, saw sales falling by 13% due to weak demand in core markets. And while overall profits rose, operating profits fell.
The high-end men’s, women’s and childrenswear firm said turnover for the year to 30 June 2016 was £157.5 million, down 8% on the previous year.
A 27% rise in e-commerce sales and 2.1% increase in retail sales could not offset the 13% decline in wholesale revenues as demand weakened in the UK, France, Russia and parts of Asia. On a like-for-like basis, retail sales increased by 3.9%, reflecting a mixed performance across core markets.
And what exactly was the problem? The brand blamed different geographical challenges for its weaker full-year results. It said its wholesale customer base in Europe continued to shrink, while the ready-to-wear market in Asia slowed down. In the Middle East, Paul Smith partners reported lower consumer confidence brought about by the unsettled political situation.
But management described the performance as “satisfactory given the period of challenge and transition and the significant impact of foreign exchange movements”.
Profit for the year was £4.838 million after a small loss the previous year, but operating profit before exceptional items fell 62% to £4.556 million.
In the 12 months, Paul Smith focused on refreshing its product and branding and streamlining is ready-to-wear, accessories and shoe collections into two distinct lines: Paul Smith and PS by Paul Smith. It said its current AW16 collection has been generally well received.
(Source: Fashion Network)