Sniff Bars boost Fragrance Shop Xmas sales, but annual profits are down
Independent perfumery retailer The Fragrance Shop said its Christmas trading was positive, boosted by its omnichannel positioning in a market that was tough overall. But its annual profits fell back due to the market’s discount frenzy.
In the seven weeks to January 4, sales from continuing activities rose 1.2% while its online sales surged 17% and like-for-like turnover also rose (although we don’t know by how much), bucking the overall weak market trend.
The company said the Chanel and Dior brands both performed well.
But while online was the standout channel as far as sales performance was concerned, as mentioned, omnichannel was key and the connection between physical and digital was strong.
For a start, click-and-collect orders were up an astonishing 40% during the period, helped by a successful Black Friday period. And It also saw success with three pop-up ‘sniff bars’ that blended the physical with the digital in-store.
But the company has also reported results for the year to March 2019 that were less pleasing, although sales rose 2.6% to £124.7 million, with online also up 17% for the 12 months. But the firm’s EBITDA fell 5.5% to £15.5 million and net profit of £9.6 million was 5.2% lower. The Fragrance Shop said this profits drop was due to “kamikaze discounting at distressed retailers that made the market acutely competitive”.
The company has opened 15 stores in the past 18 months, but despite this, CEO Sanjay Vadera said “competition for fewer high street customers is undoubtedly fierce. But while we were sad to say goodbye to our House of Fraser concessions in January 2019, I’m proud to lead a retail business that can say it didn’t close a single high street shop during the calendar year and continued to grow online and offline”.
He added that “the winners in retail will be those that can successfully integrate their digital and physical businesses to look after a customer that wants to pick and mix between the two”.
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