Designer fashion brand, Paul Smith, has reported drop in full-year turnover as its largest channel, wholesale, saw sales falling by 13 per cent due to weak demand in core markets. The brand also said the operating profits fell despite seeing a surge in overall profits. Profit for the year 2016 was £ 4.838 million, but operating profit fell 62 per cent to £ 4.556 million.
A 27 per cent rise in e-commerce sales and 2.1 per cent increase in retail sales could not offset the 13 per cent decline in wholesale revenues as demand weakened in the UK, France, Russia and parts of Asia. On a like-for-like basis, retail sales increased by 3.9 per cent, reflecting a mixed performance across core markets.
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According to the brand, the reason behind declining full-year results is different geographical challenges. It claimed its wholesale customer base in Europe continued to shrink, while the ready-to-wear market in Asia slowed down. In the Middle East, Paul Smith partners reported lower consumer confidence brought about by the unsettled political situation.
But, despite all the weaker results, management described the performance as “satisfactory given the period of challenge and transition and the significant impact of foreign exchange movements”.
In last 12 months, Paul Smith focused on refreshing its products, branding and streamlining its ready-to-wear, accessories and shoe collections into two distinct lines: Paul Smith and PS by Paul Smith. It said its current A/W collection has been gaining great response and the brand is looking to compensate its weaker wholesale revenues through this.
