Soaring administration costs dragged troubled fashion retailer Blue Inc to a £2.6m loss despite the firm almost doubling revenues to £50m, its latest figures reveal.
The UK firm, which entered into a company voluntary arrangement (CVA) in March 2017, made a loss of £2.6m in the 52 weeks to July 2017.
However, this included a gain on the writedown of the CVA of just over £9m. Excluding the gain on CVA creditors and other exceptional items, the adjusted loss stood at £10.9m.
Turnover was £49.7m, up from £23.4m, with gross profit from trading standing at £22.5m, almost double the £11.9m reported in the previous period. Profit margins were down from 51.1% to 45.3%.
However, administrative expenses rocketed from £18.7m to £32.3m, leading to an operational loss of £1.52m and a loss before tax of £2.63m. Interest payable and expenses accounted for £1.1m.
According to accounts filed at Companies House, the firm improved its working capital resources following an equity injection of £2.6m from shareholders. Uniserve contributed £1.6m and a further £1m came from Padma Textiles, one of Blue Inc’s key creditors.
In a business review the retailer said: “The economic outlook for the high street retail sector continues to remain challenging as sales will continue to be affected by downward pressures on both volumes and pricing, whilst overhead costs remained fixed.
“Over the fourth quarter of 2017 and first quarter of 2018 a number of high street retailers continue to experience financial distress. Despite the challenging conditions it is the directors’ expectations that the company will continue to comply with the obligations under the CVA.”
Following the CVA approval last year, Blue Inc reduced its store count from 153 to 96 by July 2017. It also decreased the headcount at its head office, and outsourced its logistics and distribution in order to reduce costs and improve efficiency.
In September the firm reported that the CVA would release approximately £9m in debt obligations.
The CVA allowed unprofitable stores to close and rents to be reduced. This move was made just over a year after one of the retailer’s subsidiaries, A Levy & Son, went through a pre-pack administration.