Theo Paphitis has warned of a ‘perfect storm’ facing retail following the devaluation of the pound and amid continuing change in the way that shoppers buy. He said this would come at one of the most dynamic times for retail that he had ever seen.
The Theo Paphitis Retail Group owns stationer Ryman, lingerie business Boux Avenue, and housewares retailer Robert Dyas. Paphitis’ comments came today as the group issued full-year results and an update on Christmas trading that showed group ecommerce sales up by 50% compared to the previous year.
“I have never known a more dynamic time for retail,” he said. “Working with heritage brands, Ryman and Robert Dyas that have both been around for over a century, the pace of change is more challenging and opportunistic than ever. Having started the Boux Avenue business only five years ago, even in this relatively short space of retail history, we have seen our business plan adjusted to take into account the momentous changes in shoppers’ habits.
“Retail, especially within bricks and mortar in the UK, is facing the perfect storm. As mentioned above, changes in consumer habits, the impact of the weaker pound against the dollar and euro, coupled with increasing labour costs, the apprenticeship levy and the sucker punch in the lack of an honest and equitable reform of what is an archaic system of business rates.
“With regard to the so-called recent business rates reform, retail has changed dramatically over the years but is faced with a tax that was introduced in a different world. The facts are that footfall and activity on our high streets and town centres are in decline but businesses like ours are about to see an overall increase instead of a decrease in their rates bill in the next 12 months.”
Ryman is a Top150 retailer in IRUK Top500 research, where Boux Avenue is listed in the Top250, and Robert Dyas in the Top350.
Ryman , which trades via 216 stores and online, turned over £127.7m in the year to March 31 2016, 2.5% down on the same time last year, although ecommerce sales grew. Earnings before interest, taxes and asset writedowns (EBITDA) came in at £9.6m, down from £10.1m last time. In the six weeks to December 24, like-for-like sales increased by 1.4%.
Boux Avenue trades online, via 28 UK stores, and 14 overseas franchise stores. Its UK sales reached £36.5m during the year, 21.5% up on last time. Gross profit increased during the year, while EBITDA reduced to £1.7m from £2.9m. During the year the company has focused on growing international sales online, and has also sold through third-party retailers including Very.co.uk, Asos.com and Lipsy.co.uk. Over Christmas, like-for-like sales grew by 16.6%. The retailer is to move to a new ecommerce platform this quarter.
Robert Dyas saw turnover fall by 4.4% to £120.0m, and underlying EBITDA fall to £1.5m from £7m a year earlier following a year in which the management team changed and investment went into a new warehouse and logistics centre as well as into ecommerce-related technology. The company, which trades from 95 stores as well as online, said that ecommerce helped to drive a 2% lift in like-for-like sales over Christmas.
Paphitis said of Christmas trading: “Once again, we observed the further shift of our customers to purchasing online with growth in this channel across the group being over 50% ahead of last year.
“Like last year, we saw multiple peaks, with Black Friday being a key event in the UK retail calendar. Retail is facing many challenges, particularly with a decline in footfall on many high streets, but at the same time we see opportunities that come with the continued development of technology that makes shopping as convenient for customers as it has ever been. We will continue to invest in this area to ensure that our much-loved brands interact with customers in ways that suits them best.”
