Smythson losses grow as market remains tough and costs rise
High-end leather goods specialist Smythson has reported higher losses in the year to the end of March 2019 with the company saying that its materials costs rose and the trading environment in the UK was tough during the period.
The company, of which Samantha Cameron used to be creative director, saw EBITDA before exceptional items widening to a loss of £4.6 million from a loss of £3.5 million a year earlier, and the final loss was £6.2 million, larger than the prior year’s £3.8 million. The bigger losses came as its turnover rose to £29.3 million from £29.1 million but gross profit fell to 65.3%/£19.1 million from 66.9%/£19.5 million.
The 132-year-old business, which started as a luxury stationery items provider, has been owned for just over a decade by Tivoli Group chairman Jacques Bahbout. Tivoli is one of Italy's biggest handbag makers so it’s no surprise that the company has expanded into that area. And the appointment two years ago of Luc Goidadin (formerly of Burberry) as it creative chief added to its fashion-focused credentials.
But his first collection only dropped in-store for autumn/winter 2019 and so didn’t boost the firm’s performance in the period the accounts cover.
The company said that this period was “below expectations” as the “retail trading environment remained challenging, particularly in the UK, and increases in raw material prices impacted margins”.
That said, it managed to achieve double-digit sales growth online with growth both in the UK and the rest of the world.
And the business “was able to stabilise overheads” while it continued to “refine the retail network and defend our market share by concentrating on brand image, remaining digitally focused, expanding our presence in key markets and investing in product development and marketing”.
Importantly too, it took several actions around the leadership team that should position it for a better future.
Goidadin was named a director in November 2018, at the same time as former chief commercial officer Xavier Rougeaux returned to Smyhtson in the CEO’s role after several years spent at Valextra and Loro Piana. And Stefano Giacomelli, Tivoli’s CEO, also became a director “to create more synergy and better integrate the supply chain”.
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