Tough half for upbeat Brand Architekts as supply, cost issues hurt
Mixed news from Brand Architekts Group on Thursday. Not so good was the combination of falling sales, lower margins and an overall loss recorded for the six-months ended 31 December 2021.
But the beauty and personal care brands supplier at least delivered some positive news of expanding distribution to major UK retailers, including Tesco and Morrisons, in its H1 interim results.
It blamed delays to brand relaunches landing in stores and planned product range rationalisation for a 19% year-on-year dip in sales to £7.4 million.
Underlying gross profit margin slipped to 32.5% from 36.3% a year ago, “impacted primarily by increased freight charges on Christmas gift product range sourced from China,” it said.
That resulted in a pre-tax loss of £1.1 million from a pre-tax gain of £0.4 million in the previous H1 after having to absorb additional freight charges and increased marketing spend for the launch of its theunexpektedstore.com marketplace, it explained.
And now for the positives. There were continued distribution gains for its Super Facialist brand including Morrisons, Look Fantastic and Dirty Works. And after a successful trial period, Super Facialist will be launching 14 products into 200-plus Tesco stores in June.
Then there was the successful relaunch of its Root Perfect brand that resulted in strong distribution gains in 300+ pan European retail chain Normal stores across Europe and also in Morrisons.
“Following the renegotiation of retailer exclusive distribution, we expect to see strong distribution gains in H1 2022/23”, it noted.
It also relaunched seven brands in September and October (Dr Salts; Root Perfect; Argan +; SenSpa; Kind Natured; Happy Naturals; Beautopia) with the benefits of the relaunch (which included new designs, formulations and environmentally-friendly packaging) “expected to be seen in H2 and beyond”.
Despite those product delays and rising costs, CEO Quentin Higham said: “We are confident that effectively implementing our brand reach and brand development strategies will drive growth in the future. We are pleased with the launch of our marketplace, which enables us to offer consumers a fully omnichannel solution.”
He added: “In the second half of the year, we will look to accelerate our digital first strategy and build out further distribution gains, as we seek to add scale to our business. We have also been working hard to offset many of the price increases though the supply chain to normalise our margins.
“Whilst challenges remain in the markets in which we operate we remain confident in our strategy and the group's ability to achieve our aims.”
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