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AllSaints profits hit by store costs and overseas growth

Group turnover at AllSaints rose 8% to £327m in the 53 weeks to 3 February 2018, but its profits took a hit from increased store operating costs and investment to support its international expansion.

EBITDA before operating exceptional items fell 21% to £20.6m due to a reduction in retail store contributions – where sales rises were not enough to offset a rise in operating costs – as well as the international investment and fluctuating currency exchange rates.

AllSaints was hit by exceptional costs of £9.8m during the year, including a £4m reorganisation of its sourcing operations.

It closed its sourcing offices in Hong Kong, India, Portugal and Turkey during the year, and relocated this function to its headquarters in London.

There were also one-off property-related costs of £4.4m, and a £1m refinancing cost.

After exceptional items, its EBITDA dropped by 55% to £10.8m.

Sales rose 6% in the UK and Europe, 5% in North America and 39% in Asia. The strong performance in Asia was attributed to the development of AllSaints’ travel retail proposition, as well as growth in its core retail sales.

Retail sales across all direct-to-consumer channels globally were up 6%. Online now makes up 20% of retail sales.

Non-retail sales – including wholesale to department stores, sales to franchise partners, and to travel retail partners in Asia – were up 80%.

As a result of this shift towards lower margin non-retail sales, together with currency fluctuations, its gross margin fell from 66.7% to 64.9%.

Founded in 1994, AllSaints is now owned by private equity firm Lion Capital.

William Kim stepped down as CEO in September and has been replaced by former chief operating officer Pete Wood.

An AllSaints spokesman said: ”We are delighted to have delivered a fifth consecutive year of growth, and it is a great testament to the breadth of AllSaints’ appeal that this growth was delivered across all of our regions and channels. Whilst our EBITDA performance was impacted by our investment in developing new wholesale, franchise and licensing channels, we are already beginning to see the benefits of having done so.

”There has been a very encouraging reaction to our collections from our wholesale customers since the year-end, and we are also excited by the potential that we see for AllSaints’s first ever range of fragrances, which is due to launch soon. The strength of the AllSaints brand continues to provide significant opportunities for us to drive the future performance of the business, and our team remains entirely focused as always on delivering the best possible experience for our customers around the world”.

 

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