Sales, profits boost at up-for-sale Hobbs, US business grows
Hobbs seems to be progressing with its turnaround as the womenswear chain’s sales and profits move upwards.
In the year to January 28, its sales rose 9% to £119.5 million, which just outstripped the 8.7% rise in gross profit to £76.2 million. And in the current year, sales have risen over 7%, despite the tough economic backdrop, while earnings have surged 139%.
It’s encouraging news for the retailer’s private equity backers at 3i after an earlier attempt to go down a more trend-led path had backfired. And it’s especially encouraging as Hobbs is up for sale with the improving performance putting it in a much stronger negotiating position. There have been reports that its owners have put an £80 million price tag on the business and that Whistles and Phase Eight owner Foschini is a potential bidder.
The change has come under the guidance of CEO Meg Lustman, who took over two years ago. She has targeted the customers the chain lost after its strategy change, returning to quality classics but also boosting the fashion element in a way that doesn’t alienate the core customer.
She has also closed stores, streamlined its operations and worked with suppliers to keep prices stable, despite the impact of inflation over the past year.
The company hasn’t officially released its annual results yet but The Times quoted Lustman saying that international expansion is key. The company currently sells in 49 countries via e-tail and has department store concessions in Germany and the US.
She told the newspaper that “brand recognition” is growing in the US via its two standalones and 23 Bloomingdale’s concessions.
And she said that with sales, gross profit and margins all up, “we now have a very strong platform to grow."
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