The drop in the value of sterling, tough trading conditions and supply chain issues led lingerie retailer Boux Avenue’s operating losses for the year to 31 March 2018 to more than double year on year.
The lingerie brand cited “very challenging” conditions as the reason for a £2m drop in revenues. Turnover fell from £49.4m in 2017 to £47.4m despite a 53-week trading period. Gross profit declined from £27.4m to £25.5m. Operating losses rose to £9.9m from £3.8m, while EBITDA losses rose to £8.4m from £2.2m in 2017.
In the strategic report included within its annual results, Boux Avenue said: “As widely reported, the trading environment for fashion retailing has been very challenging in stores and, most recently, this has extended to the online market.
“This has been met with constant and increased promotional and discounting activity in our market, which we have been unable to avoid.
“Despite trading the business aggressively, we saw a decline in sales of £2m. The increased discounting, as well as the pressure on sterling against our main purchasing currency, the US dollar, resulted in a lower gross profit margin of £1.9m.
“It was also a disappointment to experience challenges with our supply chain which had served us well since launching the business and this resulted in the business not having the full range of stock planned, particularly at key trading times of the year.
“The decline in sales in the year, as well as the pressure on margins and the continued investment, which saw costs increase by over £4m, resulted in an EBITDA loss of £8.4m
“The results were also adversely impacted by additional provisions made in the year against our stock holding from previous seasons.”
Despite the challenging year, Boux Avenue said it would continue to invest in key elements of the business and deliver both infrastructure and management improvements to help drive growth in the medium and long term.
Commenting on the results, senior retail analyst at GlobalData Karia Rende said: “As shoppers are offered a wide variety of choice in value clothing retailers such as Primark and H&M, Boux Avenue should further utilise its position as a lingerie specialist, offering fitting and advisory services in store and additional purchase deals for those who book appointments.”