Luxury leather goods and stationery retailer, Smythson, has released its financial results for the year ending March 2021. Despite a decrease in sales turnover from £27.6 million to £16.9 million, the company managed to turn a profit. Although gross profit as a percentage declined from 64.7% to 59.9%, profit on an EBITDA basis reached £3.1 million, surpassing the previous year’s loss of £5.2 million. Pre-tax and net profit also showed improvement, coming in at £1.9 million compared to a loss of £6.4 million in the previous period.

These results reflect the impact of the initial UK lockdown and subsequent lockdowns throughout the year. Smythson faced challenges during the early stages of the pandemic, as consumers were cautious about shopping in physical stores, even when they were allowed to open. Despite this, the company saw a strong rebound in retail performance later in the financial year, as consumer confidence and a desire for physical shopping returned.

Smythson, which manufactures its products in the UK and through a subsidiary in Italy, operated from 12 monobrand locations as of March 2021, in addition to its online platform. However, the stores experienced prolonged closures due to lockdown restrictions. To establish a more stable base of overheads, the company plans to refine its retail network by closing unprofitable stores. This will allow Smythson to focus on expanding its brand visibility, growing its digital channels, entering key markets, and investing in product development and marketing.

Digital sales played a crucial role in Smythson’s performance. The shift towards online shopping during lockdowns significantly benefited the company’s e-commerce channel. While the reopening of stores may have impacted overall online growth in the market, Smythson experienced impressive growth in its own online sales, which increased by over 30% (£3 million) compared to the pre-pandemic period. In addition, the company saw consistent sales in its important US market, driven by a 25% increase in conversion.

While Smythson has achieved success, it still faces challenges moving forward. The company is currently negotiating with landlords to secure rent concessions, as demand in the luxury retail sector remains uncertain due to global and local economic conditions caused by the pandemic and the recent Ukraine conflict. Furthermore, Smythson has faced cost increases within its supply chain. However, the company has managed the Brexit situation smoothly, with its Italian operation handling wholesale orders outside of the UK. Additionally, Smythson is working on developing a second hub in Italy to further enhance order fulfillment for both the EU and the rest of the world. The directors remain confident in the company’s ability to achieve sustainable sales growth in the long term.

Useful links:
Smythson Official Website
Reuters Article on Smythson’s Financial Results