Specialist retailer Hobbycraft is now in a position to “prosper” after previously suffering a fall in annual earnings, Retail Week can reveal.
Hobbycraft accounts being filed at Companies House show a fall in sales and profits in the year to February 16. The retailer said the performance showed why a restructuring was needed, and that trading has since improved significantly.
Hobbycraft, which was acquired by investor Modella in August 2024, last year recorded total revenue down 1.1% to £215.9m and like-for-likes down 4.3%. Online was also down 5.7%.
Adjusted EBITDA halved to £5.2m, which was attributed primarily to a non-cash impairment charge against both intangible and tangible assets, and the one-off costs associated with the sale.
In May this year, Hobbycraft undertook a CVA and shut some branches as it sought to create conditions for success.
Hobbycraft chief executive Alex Willson said: “These results demonstrate why the restructuring and CVA were necessary to ensure that Hobbycraft can now prosper in the future.
“FY25 was a challenging year for retail in general, marked by subdued consumer sentiment and inflationary cost pressures, and Hobbycraft was not alone in feeling the impacts of this.
“Following a detailed review of the strategy and financial position of the company, we implemented a CVA to improve liquidity and secure the long-term viability of the company and reviewed the store portfolio, which had expanded significantly in recent years. This resulted in the closure of 18 under-performing stores and a comprehensive cost reduction across the estate.”
“We entered FY26 facing similar market conditions, but the business is now better positioned for the future. Our new strategy was launched at pace, and our colleagues have worked tirelessly to bring key initiatives to life, including the launch of Hobbycraft TV and the introduction of Post Office and Toys R Us concessions in our stores.
“Encouragingly, we achieved strong trading over the last four months and improved profitability, positioning the business for success as we approached the peak trading period.”
Modella Capital managing director Joe Price said: “Following difficult trading and increasing costs, we agreed that restructuring was required. It was obvious to us that we would need to restructure the business by reducing store numbers and cutting costs to a level where profitable trading is possible again.
“Now the restructuring is complete, the positive initiatives brought in by Alex and the team are reaping rewards and we have seen stronger trading in recent months. Hobbycraft is a much-loved business and a strong brand, and we are delighted to be supporting the turnaround of the business in this way.”
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