Solomon Lew’s Smiggle UK writes up sales boost as possible demerger looms
The British arm of Solomon Lew’s stationery chain Smiggle has seen a rebound in sales after years of pain sparked by Brexit and the pandemic.
The British arm of stationery chain Smiggle, which could form the core of a future demerged high-growth retail business for Solomon Lew’s Premier Investments, has seen a rebound in sales after years of pain sparked by Brexit and the pandemic.
The latest accounts for Smiggle UK, which has 110 stores, show sales have risen but underlying earnings weakened as Covid-19 government grants end as the pandemic petered out.
According to its accounts Smiggle UK posted sales of £54.05m ($105.4m) for its 2022 financial year, up 31.7 per cent from sales of £41.014m in 2021.
The British arm of the popular Smiggle retail banner also managed to produce its second consecutive year of profits after a run of losses caused by Brexit and lockdowns in Britain during the pandemic.
Smiggle UK recorded a net profit of £2.094m for 2022, down sharply from a profit of £6.966m in 2021 – although the 2021 accounts were boosted by almost £5m in Covid-19 government grants.
In 2020 Smiggle UK lurched to a loss of £13.1m as stores schools were shut and significant impairments plunged the business deep into the red.
The return to sales growth and profitability will be welcome relief for its owner, Mr Lew’s Premier Investments.
Well before Brexit and Covid-19 the chain was earmarked to drive super profits for the company as it embarked on an ambitious overseas expansion that included opening stores across Britain.
At one point Smiggle had 138 stores in Britain but after leaving many locations and not renewing leases, at the end of fiscal 2022 it had 110 stores.
It comes as the $4bn Premier Investments two weeks ago unveiled a possible historic break-up of the publicly listed fashion empire built by Mr Lew since the 1990s.
This could see the high-growth Smiggle and Peter Alexander sleepwear chain demerged from Premier Investments’ lower-growth retail chains, including Portmans and Just Jeans.
A newly formed Smiggle and Peter Alexander fashion group would take in the retail chains’ growing local and international store network, including its Smiggle UK arm.
A spokeswoman for Premier Investments said Premier Retail – which holds Smiggle as well as the other fashion chains – reported its fiscal 2022 results in September 2022, which included the performance of its wholly owned Smiggle UK subsidiary.
The spokeswoman said Smiggle UK’s business had now “reset” after the turbulence of the last few years.
“Smiggle has reset from the pandemic and is going from strength to strength,” she said.
“Following fiscal 2021 results which were heavily impacted by Covid-19 lockdowns, Smiggle UK’s fiscal 2022 accounts show a strong normalised result with ongoing profitability and a further strengthening balance sheet position.
“As outlined in our record first-half results announced in March 2023, Smiggle’s first-half 2023 sales performance in Europe surpassed expectations, with the brand gaining significant market share and delivering strong like-for-like sales growth, particularly in key tourist stores as global travel returned.
“We recently announced a Premier Retail trading update for fiscal 2023 with expectations of record results for the full year. Smiggle UK is a key contributor to these record results.
“Premier Investments looks forward to updating shareholders at the end of September with Premier’s full-year results, including Smiggle’s results for the 2023 financial year.”
Two weeks ago, as part of its strategic update and review of the Premier Investments structure, the company also announced the sudden departure of its chief executive, former JB Hi-Fi CEO Richard Murray, after only two years in the role.
Mr Murray will step down as Premier Retail CEO on September 15.
He resigned as an executive director of Premier Investments effective August 21.
Documents lodged with the British corporate regulator show Mr Murray also resigned as a director of Smiggle UK on August 21.
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