Footasylum Sees Revenue Growth Amid Profit Challenges, Unveils Expansion Plans
Footasylum, in its latest financial report for the year ending in January, witnessed a decline in operating profit and gross margin, coupled with significant exceptional costs during the period.
Despite these challenges, the company achieved a notable increase in revenue, surging from £281 million to £298 million. This revenue growth came alongside a rise in the cost of sales, amounting to approximately £10 million. However, the gross profit showed improvement, reaching £139 million from £132 million. Conversely, administrative expenses saw a substantial increase of nearly £13 million, while exceptional items totaled £4.47 million, compared to £2.36 million in the prior year.
Notably, in the preceding financial year, Footasylum had received £6.2 million in government relief related to the pandemic, significantly impacting that year’s profit figures.
The overall result was a decrease in operating profit to £6.47 million, down from £14.8 million in the previous year, and a profit before tax of only £2.8 million, compared to £11.1 million. Consequently, net profit stood at £1.76 million, down from £8.9 million in the preceding 12 months.
In the latest financial year (FY23), physical sales represented 57% of the company’s revenue, marking an increase from 51% in FY22. Meanwhile, online sales accounted for 40% in the latest period, a decline from 46% the previous year, while the percentage of revenue attributed to wholesale remained steady at 3%.
This shift in revenue sources directly correlated with the end of the pandemic and the resurgence of in-store retail. However, the physical retail landscape hasn’t been without its challenges.
Footasylum acknowledged that it faces the well-documented difficulties affecting physical retail in the UK and remains vigilant to sector-specific headwinds. To counter these challenges, the company is committed to rigorous cost control, streamlining and enhancing its internal and external delivery chain, and actively pursuing cost-saving opportunities.
Despite these measures, Footasylum recognizes the ongoing importance of physical stores alongside its digital presence. In the current financial year, the company is set to expand its store network, with a strategic focus on enhancing store performance and maximizing the profitability of its physical retail spaces.
In a noteworthy move, the company recently announced the opening of a flagship store on London’s prestigious Oxford Street. This decision was driven by robust demand for Footasylum’s branded streetwear offerings. The new 20,000 sq ft store, spanning two floors, serves as a prominent click & collect location. Additionally, Footasylum has been progressively opening new stores across the UK, with FY24 poised for further expansion.
It’s important to note that Footasylum is now under the ownership of German asset management firm Aurelius, following a competitive period in which JD Sports sought to acquire the company but was later required to divest it based on competition authorities’ rulings. The sale process, although marked by delays as JD Sports contested the decision, ultimately led to the change in ownership.