AllSaints faced tough pandemic year but is upbeat as sales improve
AllSaints Retail Limited has filed its accounts for the year to last January and has also updated us on its performance during 2021. It clearly suffered at the height of the pandemic as its gross turnover fell to £261.4 million from £364 million in the previous year, but trading has improved since.
Its gross profit for the year to January 2021 was down at £149 million from £233 million and the gross margin fell to 57% from 64%. The margin decline was caused by the company being forced to apply more discounts to clear stock.
The company said that operating profit was only £650,000, down from £9.4 million, but the net loss for the period, while large at £35.4 million, was actually less than the £45.4 million loss of the previous year.
AllSaints said it had begun that financial year with strong momentum and a clear strategy, following on from the period up to January 2020 that had “seen its most successful financial performance in its 25-year history”, despite its net losses. That success had been judged by its rising sales in all channels and geographies.
However, this was derailed by the arrival of the pandemic in March 2020. The most significant impact of that was the loss of trade due to store closures in the UK, Europe, US and Canada. It also saw significant closures in Asia. To counter this it focused more heavily on digital and online sales grew 53% in the period, representing 48% of total revenue compared to 23% before the pandemic.
But even with higher online sales, stores were clearly challenged and it launched company voluntary arrangements in respect of its UK, European and North American stores in order to ensure it had a “viable and sustainable operating model for its physical stores by removing rent liabilities”. Creditors approved this in July 2020 and the measures remain in force through to July 2023.
It also said that just after the period these accounts cover ended – in February 2021 – it raised an extra £13 million in funding from its private equity owner Lion Capital. And in September 2021, it secured a new five-year, £65 million funding facility with its lender to support its future growth plans.
Post-period-end during 2021, it continued to see an adverse impact from the pandemic as stores in the UK and Europe stayed closed until the spring and restrictions continued even after they reopened.
However, as vaccination programmes in Europe and the US gained momentum, trading across the store portfolio showed an improving trend and the directors are “pleased with” the 2021 performance. The company said it saw positive customer reactions to new product launches and coupled with tight inventory management and a return to its pre-Covid trading strategy of targeted promotions, it has seen an improving gross margin performance.
It's interesting too that in October last year, the assets of John Varvatos were contributed to the group. That business was part of the Lion Capital portfolio brands with Lion acquiring the restructured John Varvatos business out of Chapter 11 bankruptcy in August 2020.
The directors see the high-end US menswear business and AllSaints as having synergies, particularly in relation to the supply chain, technology and logistics that should “contribute to future growth of the overall business”.
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