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Paul Smith profits hit by restructuring costs

Premium men’s and womenswear brand Paul Smith’s operating profits after exceptional items fell 49.8% to £9.5m in the year ending June 30 2015, as it invested heavily in a restructure.

Its operating profit before exceptional items was £11m, down 41.8% on the previous year.

Profit after tax for the year was £6.7m, down from £16.2m the year before.

The company has reorganised its design teams ahead of launching two new collections for autumn 16: Paul Smith and PS by Paul Smith.

This cost the business £982,000, while it was also hit by exceptional costs related to the closing of one store and a showroom in undisclosed locations. In total, the one-off costs amounted to £1.5m.

Profit was also hit by falling sales, down 8.4% overall.

Retail sales decreased by 4.8% overall and 3% on a like-for-like basis, reflecting a mixed performance across its core UK and Italian markets and the temporary closure of its Heathrow Terminal 5 shop while it was relocated. The store reopened in December 2014 after four months.

The business opened two new stores in New York and one in Canary Wharf in London during the period. It also opened franchise stores in China and Luxembourg.

Online sales rose 12% and Paul Smith said it would continue to invest in developing and promoting the site.

Wholesale sales were down 11.3% on the previous year. The company will review all of its major distribution channels ahead of its new collection structure.

Licensing income also decreased, but the business did not give details.

However, the company said it expects future sales to increase as it “refreshes and clarifies” its offer and introduces a new interpretation of the classic Paul Smith product range.

“The directors consider the result for the year to be satisfactory given the period of transition, investment and reinvention,” said a statement in its Companies House filing.

The figures in this article were updated on January 22. The original article referenced figures for Paul Smith Ltd, a subsidiary of Paul Smith Group Holdings.

 

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