Luxury retailer Julian Charles forced into the red by rising costs
Rising costs forced luxury bedding and homewares retailer Julian Charles into the red during its latest financial year.
The company said its accounts were hit by a “wide range of macro-economic and geo-political factors” including an increase in costs for energy, container shipping and staff.
As a result, Julian Charles has posted a pre-tax loss of £978,580 for the 12 months to April 30, 2023, down from a profit of £288,225.
During the year, the company’s turnover increased slightly from £17.3m to £17.6m.
The year was the second full 12 months of trading under the ownership of SKG Capital, which acquired the brand in June 2020.
At the end of its financial year, the brand has 73 trading locations made up of stores and concessions.
A statement signed off by the board said: “Despite significant challenges within the UK retail market, the business enjoyed sales growth on last year of 2 per cent across stores and the online channel combined.
“The base store estate delivered significant growth on last year, with like-for-like sales for all stores increasing by 6 per cent.
“A new store opening in Manchester and the relocation of an existing store to a larger unit in Fleetwood, Lancashire, have both proved very successful and give confidence in the retail strategy going forward.
“A wide range of macro-economic and geo-political factors have contributed to rising costs for the business over the last two years.
“Energy costs increased to an exceptionally high level, principally driven by the supply-side impact of the Ukraine conflict, driving up the cost of manufacturing our products and operating UK stores.
“Container shipping costs rose by 10 times their normal rate before returning to more normal levels, which, in conjunction with increased UK transport costs, erode gross margins.
“Staff costs continue to increase in line with changes to the National Living Wage. Business Rates are increasing as relief is taper down.
“A weakening of Sterling vs the Dollar increased the effective cost of imported products. On top of the specific areas, high UK inflation impacted the whole cost base.
“Whilst trading was resilient in FY23, the business took steps to safeguard the business given the uncertainty of the UK economy.
“Product sourcing was switched to be more UK based, allowing more flexibility in the timing of intake and reducing the level of cash tied up in stock on the water.
“Whilst this adversely impacted buying margins, strong negotiating and a reduction in discounting largely mitigated this impact.
“In common with most businesses operating in the retail sector, the company faces continued risks relating to a downturn in consumer footfall alongside the shift in spending habits from physical retail to online.
“However, the like-for-like growth in stores demonstrates that there is still a market for traditional ‘bricks and mortar’ retailing, with opportunities to increase the retail footprint in towns and cities not yet addressed.
“The business continues to invest in its online offering to ensure that consumers can engage and transact with the business in their preferred channel.”
During the year the average number of people employed by Julian Charles fell from 246 to 237.