Upmarket womenswear retailer Hobbs’ pre-tax profits soared 137% on record sales in the year to January 29.
Pre-tax profits rocketed from £2.9m to £6.9m as Hobbs focused on cost control, while turnover in the period rose 12.2% from £91.3m to £102.5m, after the retailer enjoyed strong sales growth across its stores and direct channels.
However, gross margin dropped to 63.6% from 65.3% as Hobbs increased promotional activity to match “aggressive levels of discounting” by the majority of its competitors, according to chief executive Nicky Dulieu.
Sales since year end have remained strong. “We are almost on double-digit like-for-like growth,” said Dulieu.
She said Hobbs has had to rely on promotions less this year. “This season I think customers have realised that they can’t keep waiting for promotions,” she said. “I think the customer is valuing the integrity of the brand a bit more and tending to get things at full price.”
Dulieu said that she was “thrilled” with last year’s performance. “It was a tough year and everything we were doing was obviously having an impact on the customer,” she said.
In June, Hobbs secured £46.5m of funding from backer 3i together with Barclays and Co-operative Bank. The retailer will use the funds to more than double the footprint of its 66-strong store estate as well as expand its existing international business, comprising seven stores.
The retailer will also invest in 300 jobs in its design and retail functions in the next two year as it expands.
Dulieu said: “The investment in the group during the year, and the significant support and commitment shown by both our major shareholder and our banking partners, demonstrates the underlying strength of the group and will enable us to increase our market positioning and to further develop our brand strategy in 2011/12 and beyond.”