Apr 14, 2021
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Hobbs in profit again in latest fiscal year, but that was pre-pandemic

Apr 14, 2021

Womenswear brand Hobbs has filed its accounts for the year to the end of March 2020 and said that prior to the impact of the pandemic, the company had been performing in line with its forecast expectations. 

Hobbs - Photo: Sandra Halliday

Its turnover and EBITDA were well ahead of the previous year by the end of February 2020. However, the spread of Covid-19 “gradually impacted consumer sentiment and store footfall”. The result of this was that turnover for the year only reached £133 million, compared to £135.4 million a year earlier.

The headline gross margin for the year dropped to 60.3% from 61.4%, which included the impact of foreign exchange and wholesale sales to its subsidiaries and other third-party wholesale partners (which had continued to grow during the year).

Adjusted EBITDA fell slightly to £20.2 million from £21.9 million, while operating profit was down to £7.6 million from £10.7 million. Profit after tax dropped to £4.3 million from £6.3 million.

The latest set of accounts followed the company having swung back into profit in the previous financial year after several very difficult years. It's a shame that it's now likely to have faced its toughest 12 months in a long time from the beginning of April 2020, which is likely to have delayed its full recovery.

That’s just speculation, of course, as the company didn't share any details about how it has performed in the months since the financial year ended, but it's clear that the pandemic hit it hard. However, it had moved very quickly to build up its cash position at the start through spending cuts and negotiations with suppliers and landlords. It also drew on support from the government's job retention scheme and from its parent company The Foschini Group. 

And it undertook a programme of restructuring at its head office and in its retail teams “to ensure not only that we are able to robustly sustain a significant and sustained period of store closure, but also that we have an appropriately sized cost base for the future post-pandemic”.

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