Toy retailer Hamleys’ net losses leapt last year to £7.1m from £2.7m as interest rate charges and restructuring costs ate into the bottom line.
But the retailer this week vowed that earnings will improve in the current financial year.
Hamleys’ EBITDA excluding exceptional items remained flat at £2.5m, while revenue increased 7% to £47.2m in the year to March 31.
Like-for-like sales dropped 6% in the year after the retailer struggled in the second half, when it posted a 12% decline versus a 5% uplift in the first half. Margins remained flat.
The retailer’s trade has picked up since the year-end. Sales rose 5% in the three months to June 30, when EBITDA growth was almost double the retailer’s expectations, said chief executive Gudjon Reynisson.
He said: “It’s been a year of two distinct halves. The credit crunch came along, but we reacted very quickly with cost-saving initiatives and we managed stock very well, so we’re in a positive cash position. I’m extremely happy with our performance and really pleased with sales this financial year.
“We’ve focused on range building, and enjoyed an uplift because of tourist traffic. Next year we will grow EBITDA significantly.”
Hamleys’ £7.1m loss included one-off charges relating to the retailer’s restructuring – such as redundancy payments – and to a future lease provision for a store inherited from Bear Factory in Watford, which it is trying to sell. It also included £3.7m of interest, £2.7m of which was shareholder interest and is not payable unless the company is sold.
Hamleys’ debt is £42m, also mainly only payable if the company is sold, leaving £6.2m of bank debt.
The retailer, which celebrates its 250th anniversary next year, increased its own-brand lines in the period. From 15% of sales two years ago, they now account for 30%. Reynisson said own-brand is “at the centre of Hamleys’ strategy”.
He also said the retailer’s travel stores have been “flying”, and the retailer wants more such stores.
Earlier this month, Retail Week revealed talks with Hamleys’ Russian franchise partner FD Lab collapsed, but Reynisson insisted Hamleys is still keen to open in the country. He said: “We’re very focused on international.”
Last year Hamleys opened in Jordan, Dubai and Dublin. This year it will open in Glasgow and Mumbai.