Value fashion retailer M&Co has reported a 40% drop in operating profits to £3.6m for the year to 28 February, which it blames on economic and political uncertainty.
M&Co’s EBITDA decreased by 19.4% to £8.7m in the same period. Online sales were up 2% in 2018/19, despite a 4% drop in total sales across all channels. The retailer said in-store like-for-like sales were also down in the period.
Meanwhile, net debt reduced from £19.2m to £8.7m in the year. M&Co said the reduction has been achieved through strong trading and cash generation, tight stock management, controlled capital investments and income from some freehold property sales.
“In the face of unprecedented trading challenges, the business has delivered a solid performance over the last financial year”, chief executive Andy McGeoch said. “Our low net debt, committed bank facilities and strong balance sheet have enabled us to deliver continued investment and improvements in all areas of our operation.
“Like most retailers, we are feeling the impact of the widely reported economic and political uncertainty in the UK, and while this puts pressure on margins, we are confident that we have a robust blueprint for long-term future growth to navigate these complexities.
“A key priority for M&Co has been expanding our product range, and over the last twelve months we have successfully launched two new brands, Khost Clothing and Sonder Studio, which have not only increased choice for existing customers but allowed access to new market segments.”
The group has invested £13.7m in capital expenditure over the past two years, including an upgraded electronic point of sale system across all stores, the introduction of new software technology to improve performance in store, increased online warehouse capability, new store fit-outs and the purchase of further freehold properties. M&Co owns its distribution centre, support offices and 20% of its trading retail estate.
M&Co has a team of almost 3,000 employees across the UK in its stores, distribution centre and support offices.