Hobbycraft has announced a considerable decline in profits, despite notable sales growth and improved margins.
- The company’s profits plunged by 80%, amounting to £393,000, influenced by inflationary challenges and one-off costs.
- Sales increased modestly by 3.4% to £218.3m with like-for-like sales rising 1.1%, reinforcing revenue growth.
- Strategies like enhanced online services and new store openings are pivotal, despite the profit concerns.
- Future outlook remains positive as Hobbycraft focuses on capitalising on consumer sentiment recovery.
In a surprising financial disclosure, Hobbycraft revealed an 80% decrease in profits, culminating in £393,000 for the financial year ending 18 February 2024. This stark drop from the previous year’s £2 million profitability was primarily attributed to inflationary pressures and one-off expenses that heavily impacted earnings.
Despite the downturn in profits, Hobbycraft managed to sustain a healthy revenue stream, with sales edging up by 3.4%, translating to a £7.2 million increase, bringing total sales to £218.3 million. This growth was supported by a modest 1.1% rise in like-for-like sales, suggesting a steady consumer interest in the brand’s offerings.
A bright spot for Hobbycraft was the improvement in gross margins from 56.9% to 58.4%. This gain was largely driven by strategic price adjustments and an increase in sales of own-brand products, which helped ameliorate some of the financial strains experienced during the year.
Hobbycraft’s commitment to expanding its market presence was evident through its focus on enhancing online sales channels and click-and-collect services, which saw a 32.1% growth compared to pre-pandemic levels. This digital initiative was further complemented by the opening of seven new stores across various locations, increasing their retail footprint to 119 stores.
Looking ahead, the organisation has earmarked £8.7 million for further growth initiatives, including additional store openings and enhancements to their digital platforms, such as the introduction of a Hobbycraft app. These investments are aimed at positioning the company to leverage any potential recovery in consumer sentiment and maintain its market competitiveness.
Overall, Hobbycraft remains optimistic about its long-term growth potential despite facing substantial profit challenges.
