Fred Perry upbeat as it files pre-pandemic results
Fred Perry Limited has filed its results for its shorter financial ‘year’ (actually the nine months to the end of 2019) and the period shows an ongoing improvement in sales, although margins were down and profits fell due to the changed reporting period. The company also highlighted a move away from seasonal collections to quarterly ones in order to focus on more newness.
The company, which opened stores in Milan and Madrid last year, achieved net turnover of £88.2 million in the nine-month period. This was down from £122.2 million in the previous 12 months. Its gross profit was £44.8 million, down from £66.1 million, With a gross margin percentage of 50.7%, also down year-on-year from 54.1% in the previous period. Net profit was £9.67 million, down from £22.82 million a year earlier.
The firm’s parent company, Fred Perry (Holdings) Limited, which owns and operates the Fred Perry and Lavenham brands in the UK and selected international markets, also filed its results what are broadly similar to the subsidiary's.
It reported net turnover of £91.2 million for the nine months, compared to £127 million for the previous full year. Its gross profit was £46.3 million in the shorter period, down from £68.8 million in the prior 12 months. Pre-tax profit in the latest period narrowed sharply to £12.5 million from £31.5 million and net profit was £9.7 million, down from £25.2 million.
But looking at the figures of the main Fred Perry subsidiary company on a more comparable basis, in the 12 months up to the end of 2019, the company saw invoiced sales of £127 million and pre-tax profit of £25.3 million. Both of those figures were higher than in the 12 months to the end of 2018.
Frustratingly, the company didn't release any update on how it has done in the year since then, but we have to assume that (like just about every other company in the UK fashion sector) it saw its business dented to some degree. It did say that it has undertaken "aggressive cost control and reduction of all discretionary projects". It has also looked again at its capital spending plans and has given priority to long-term strategic projects, as well as increasing its focus on social commerce.
And as for the other big issue currently impacting all UK companies – Brexit – the firm said that despite any uncertainty, it has a large supplier base outside of the EU, "which mitigates the risk of trading friction between the UK and the EU". It's also planning to expand its European distribution centre with additional functionality enabling it to deliver to all customers within the EU.
The business appears to be in a robust net cash position with more than £100 million available to it and no borrowings. But it expects the pandemic to impact trading "for some time to come". Yet it believes the strength of its brand and its significant cash reserves will help it face any challenges and allow it to make decisions based on "the long-term strategic interest of the brand”.
And its long-term strategy includes targeting customers who are "global and hyper connected" by moving from "an outdated seasonal approach to quarterly collections to provide our customers with continuous newness and brand-nourishing stories”.
The company is also aiming to enhance its brands at every stage by controlling the distribution channels "with a hybrid approach towards retail and wholesale". As mentioned, it's also emphasising social commerce and "deepening the fusion between product, music, sport and subculture". And it also has a greater focus on social responsibility.
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