Smythson loss narrows as sales recover

High-end leather goods specialist Smythson has filed its results for FY23 (the year to April 2023) and said that most retail stores were back to pre-Covid numbers.

But its travel locations, while much improved, continued to feel the impact of reduced passengers, on less international travel in the first half of the year.

Overall turnover for the year was £23.6 million compared to £20.6 million in 2022, with the cost of sales reducing so the company’s gross profit as a percentage rose to 68.3% from 59.5%. 

That said, EBITDA was a loss of £6.2 million, albeit better than the loss of £7.3 million in the previous year. The operating loss was £6.9 million compared to a negative £8.2 million the year before, and the net loss was £7.3 million, narrower than the £8.5 million in 2022.

Its sales are clearly headed in the right direction and in the latest year were up 30% on pre-Covid numbers, while year-on-year growth across its direct-to-consumer channels was 14%. This was supported by “the onboarding of new creative and media buying agencies, both of which contributed to footfall growth in stores and traffic growth in its key territories”, as well as online. It also saw growth in full-price sales as it considerably reduced markdown activity.

The company said that work continues to refine its retail network, exiting loss-making stores to create a more stable base of overheads. This will also enable it to focus on growing its brand visibility, on its digital channel and on expanding its presence in key markets, as well as on investing in marketing and digital expansion.

In the latest year, that meant it exited four underperforming stores, including some high-profile locations, such as Madison Avenue in New York, Royal Exchange in London, Terminal 2 in Heathrow Airport and Bicester Village in the UK. That said, in February 2023, it invested in Heathrow Terminal 4 to continue developing its travel retail strategy.

And since the financial year ended, the company has continued the retail refining process, which led to the closure of its Westbourne Grove store in London almost three months ago and an agreement to surrender the lease back to the landlord for its New Bond Street store last month with a view to relocating on the famous shopping street in the near future. 

In the latest year, the post-pandemic return to physical shopping drove strong growth overall across the retail channel, which was up by £3 million – or around 30% – compared to the previous year. E-commerce growth was particularly promising in the US with a 17% year-on-year rise, enough to offset the 6% decline in the UK (affected by the cost-of-living crisis and weak consumer confidence, as well as postal strikes and early Christmas promotional activities).