Pandemic dents Paul Smith, but wholesale, e-tail are resilient
Paul Smith Limited has continued to suffer from the impact of the pandemic in it latest year, its accounts for the 12 months to the end of June 2021 show.
Turnover fell by 17% and like other retailers at all levels of the market, the company said it continued to be “significantly impacted” by multiple factors linked to the global health crisis. But Brexit also had a part to play in its problems and turnover dropped from £148.9 million in the previous financial year to £123.8 million this time.
It said that the gross margin was “adversely affected” as a result of “extra costs of carriage and duties due to Brexit and also the mix of retail sales taken during the sales period”.
It all meant that operating losses increased to £24.3 million from £15.5 million “after another year of significant exceptional costs”.
Retail sales for the latest year fell by 18% overall and by 11% on a like-for-like basis. That came as some shops were forced to close for periods during the year and footfall remained low. Reduced travel and tourism also severely limited footfall to some of its most important shops.
The impact of this on retail sales for AW20 was a 35% fall year-on-year and a 34% drop on a like-for-like basis. And while retail sales for SS21 were up 36% on the previous year (when they had been severely impacted by the onset of the pandemic), they were down 35% on a like-for-like basis compared to the pre-Covid SS19 season.
But the company said that it's seeing improvements in footfall with overall retail sales for AW21 running at 89% of pre-pandemic levels on a like-for-like basis. And within this, e-commerce sales are 65% higher than AW19.
In fact, direct e-commerce sales during the year represented 66% of its total retail sales compared to only 31% in the previous year. While it expects some rebalancing towards more normal patterns as the months go by, it's also expecting e-commerce momentum to continue based on current trends and its continued investment in digital.
The company added that wholesale trade with franchise partners, with department stores and selected multibrand shops and online retailers globally fell by only 8% in the latest year, dropping to £74.9 million. The wholesale business – which accounted for more than half of the company’s total turnover – remained resilient and it said it has continued to perform well in terms of deliveries and sell-through. Forward orders confirmed since the year end for the new SS21 season were 49% up on the SS20 season and only 2% down on the SS19 pre-pandemic period.
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