Boden’s full-year profit was hit by increased cotton prices last year as the multichannel retailer’s overseas sales soared.
Pre-tax profit plunged 45% to £17.9m in 2011 as the etailer, a favourite of David and Samantha Cameron, opted not to pass the price hikes onto the consumer.
Boden chief executive Julian Granville said: “We weren’t going to be compromise quality. We’re essentially a 100% natural fibre business and we weren’t going to move from that. We didn’t think the UK consumer could take [a price increase]. The long term loyalty is better than a short term boost.”
Value retailer Primark also experienced a 8% profits dip in its 2011 financial year as it opted to keep prices sharp despite rising costs. As reported by Retail Week last week, River Island adopted the same policy.
Boden’s total sales jumped 6% to £245.9m in 2011. The sales increase continued into the first half of 2012 as group like-for-likes soared 10%driven by Boden’s soaring international sales.
The retailer’s overseas revenue overtook UK sales for the first time in the half. Sales in Germany leaped 43% over the period and increased 10% in the US.
Boden is ramping up its international growth by investing in in-country teams, including a marketing office in Boston in the US.
Granville said the UK is still tough and there were no signs of green shoots. However, Boden is experiencing “modest” growth in the UK according to Granville, which he said was “quite an achievement” in the current climate.
Granville expects to see a margin benefit from falling cotton prices in the second half.