Fred Perry weathers the pandemic storm despite profits drop
Fred Perry Limited has filed its 2020 results at Companies House and while the comparison figures are skewed by the fact that it changed its financial year-end date in the previous period, they show that the year of the pandemic was clearly a tough one for the business.
It said that revenue was “significantly impacted" and during the year the business achieved net turnover of £101.8 million, compared to £88.2 million in the previous period that covered only nine months.
However, on the plus side, with restrictions on non-essential retail in place for much of the year, it said shoppers turned in “ever greater numbers to our websites where sales increased by 38% compared to 2019”.
The company said that gross profit was £48.7 million in the year compared with £44.8 million in the previous nine months, with the gross margin percentage falling to 47.8% from 50.7%. The margin was lower due to an increase in freight costs and higher levels of markdowns to clear old stock.
The firm worked hard to control costs during the year and managed to report a pre-tax profit of £7 million compared to £12.3 million in the previous period. The post-tax profit was £5.2 million, down from £9.7 million. However, those falls looks less worrying given the environment in 2020 and how so many of Fred Perry's peers fell into losses.
The company also paid dividends to its parent company leading to a reduction in net assets to £125 million compared to £126.8 million in the previous period.
Fred Perry was fortunate that it entered the pandemic period with a history of solid growth and a strong balance sheet and it said it's “cautiously optimistic about the recovery”, with demand for its products remaining “strong”, although it concedes that there may be some challenges along the way.
And unlike some of its peers, it isn't having to completely rethink its approach in the light of the pandemic.It's continuing with the strategy that it already had in place, moving away from the traditional seasonal approach and launching quarterly collections to provide shoppers with “continuous newness”; controlling its distribution channels with a hybrid approach towards digital, retail and wholesale; emphasising social commerce, deepening the fusion between product, music, sport and subculture; and placing a greater focus on social responsibility.
It also said it suffered from the impact of Brexit early on in 2020, but it has reviewed its supply chain to streamline deliveries and its European distribution centre has been expanded to enable it to deliver to all of its customers based in the EU. It incurred some additional import costs but the expansion of its operational capacity at the warehouse resolved the issue.
And despite the challenges in trading with Europe, during the year it also opened two owned and operated stores in Germany.
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