Paul Smith FY19/20 turnover drops 18 percent amid pandemic

Paul Smith Group Holdings has reported an 18 percent drop in turnover for the 12 months ended June 30 of last year as the pandemic took its toll on the business.

Prior to March 2020, turnover at the British fashion label had been “reflecting annualised increases” - but very few sales in the fourth quarter linked to store closures meant turnover for the year dropped to 177 million pounds compared to 215 million pounds in 2019.

Breaking it down by channel

Retail sales for the year fell by 23 percent overall and 24 percent on a like-for-like basis. Prior to the pandemic, retail sales were broadly flat on a like-for-like basis due to a drop in Hong Kong sales linked to protests.

Meanwhile, wholesale sales to franchise partners, department stores, multi-brand stores and online retailers dropped by 10 percent to 71 million pounds, while licencing income fell by 14 percent to 18 million pounds.

Gross margin was also adversely affected and the company swung to an operating loss of 21 million pounds compared to a profit of 5.7 million pounds the year before. This was impacted by some significant exceptional costs including a decrease in investment property valuations.

But that was partly offset by government job support assistance received of 4.1 million pounds. Net assets for the year were 94 million pounds compared to 110 million pounds in 2019.

The company reported a net loss of 21.6 million pounds compared to a profit of 3.6 million pounds a year earlier.

“The coronavirus has bought significant uncertainties but we have responded to the challenge and will strive to remain financially secure, working closely with our shareholders to provide much needed security to focus on a positive outlook for the business,” the company said in a statement.

It said it has also entered into an agreement with its shareholders under which a net 44 million pounds of funding was received at a group level “to cover short term cash flow requirements and the potential longer term risks in the current economy”.