Victoria Beckham’s fashion label may need cash injection to stay afloat
The future of Victoria Beckham’s eponymous fashion and beauty line could be at risk after directors raised doubts over its ability to continue as a going concern without additional funding.
The Beckham’s own a majority stake in the firm, meaning there is a “reasonable expectation” that the celebrity couple will provide a cash injection to keep the fashion label afloat throughout the remaining months of the Covid-19 crisis.
However the fashion label’s management said a “material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern”.
In April last year shareholders paid in £9.2m to settle a £6.1m loan due to HSBC and to “sustain the business operations amidst an unprecedentedly challenging economic backdrop caused by the global Covid pandemic”.
According to the latest available accounts, the former Spice Girl’s fashion and beauty brands reported widening losses of £15.9m in 2019, compared to £12.5m in 2018.
Posh’s firm also reportedly received a £16m bailout from a “mystery shareholder” in 2018, with reports suggesting her husband could have been behind the emergency funding.
“Directors have determined that further support will be required from its shareholders to further protect the group from the impact of the economic uncertainty and also assist in the implementation of the change in strategy,” directors said in the financial statement.
“Despite the reasonable expectation that any support will be provided from the shareholders this requirement of further funding indicates that a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern and therefore its ability to realise its assets and discharge its liabilities in the normal course of business.”
David and Victoria Beckham paid themselves a £14.5m dividend for 2019, despite a drop in profit during the year.
David Beckham Ventures reported profit after tax of £9m, down from £11.5m the previous year.
While the latest financial statements cover 2019, they also showed that the Beckhams paid themselves a dividend of £7.1m in 2020.