Paul Smith Group Holdings’ results for the year to the end of June 2024 showed turnover falling 7% to £197.8 million from £212.5 million with falls in its wholesale channel only partly offset by smaller increases in retail and licensing income.

But the company’s gross margin percentage improved due to a bigger chunk of sales being made through its retail channel as wholesale dropped.

An operating loss of just £21,000 was recorded but that was compared to an operating profit of £4.1 million in the previous financial year. Its strong cash position was maintained, despite major bank loan repayments made during the year, after it disposed of a property investment. The loss for the year after interest and tax charges widened to £5.7 million from £4.1 million.

Paul Smith added that it continues to face challenges due to a lack of consumer confidence in its major markets. And it said that in response to falling sales it has “fought hard to successfully maintain gross margin and contain overheads. We have continue to invest in understanding our customer and focusing our marketing activity as a result in order to grow future sales and brand desirability”.

Retail sales for the year fell by 4% overall to £105.158 million and fell 2% on a like-for-like (LFL) basis. This reflected the closure of some shops, increasing traffic online, but an LFL footfall drop of 7% in its continuing shops. Yet e-commerce sales increased by a healthy 17%.

And retail sales for the AW23 season rose 2% overall year on year and 6% LFL. But the recent SS24 wasn’t quite so buoyant with a 10% year on year drop and a 6% LFL fall.

The company added that it has seen “pleasing improvements” in traffic online with a 20% rise year on year. But like for like footfall remained flat and wass 24% down compared to the year ended in mid 2019 (its last financial year before the pandemic). 

Bringing us more up-to-date, for the most recent season, AW24, while overall retail LFL sales have been up only 1% compared to the previous AW season, they’ve risen 5% LFL. Within this, e-commerce sales have risen 22% year on year for the season.

Back with the year to June 2024, direct e-commerce sales during the period made up 35% of its retail sales overall compared to 31% in the previous financial year as sales online increased faster than those to physical shops. It’s been understandably pleased with its e-commerce performance, “especially compared to our competitors and we will continue to invest in our digital capability and digital marketing activity”.

The company added that it has continued to review and refine its store portfolio and has closed one shop in the UK in Leeds as well as one each in Milan and Paris and three in Germany (Berlin, Hamburg and Munich).

As mentioned, wholesale has been tough and its wholesale sales to franchise partners, department stores, multibrand stores and online retailers globally fell 12.5% to just over £75 million this time.

Wholesale has been challenging generally, particularly in the company’s largest markets where its larger partners have also faced reduced customer confidence and demand. It means the company is staying cautious for the coming year as it knows that its “wholesale partners are managing their own stock levels and equity as they continue to find the recovery slower than hoped”.

Meanwhile licensing income increased 5% year on year at just over £16.5 million, mainly as a result of a new design license agreement entered into during the year. Overall the company operates both territorial and product licenses. Its territorial licenses cover mainly Japan via licensed retail and wholesale operations. Its product licenses cover eyewear, fragrances, rugs and other homewares, and kidswear.