Hobbycraft plans to respond to the cost-of-living crisis with investment in the customer experience in its current financial year, as it expands its new online and in-store workshop channel, launches new subscription services and opens three new shops.
The arts and crafts retailer, which this week reports year-on-year growth in both revenue and earnings, has developed its ecommerce business significantly over the course of the pandemic. Online sales were 58.2% higher during the year than they were two years earlier, before Covid, and a third (33%) of ecommerce orders were collected from stores. It launched a new ecommerce platform in March 2022.
Now Hobbycraft, ranked Top100 in RXUK Top500 research, says it will continue to invest its workshop channel that emerged during the pandemic, when its business was pushed online and now holds events both online and in-store, teaching new and improving crafters. These, it says, are among the actions that have helped it to overcome the supply chain delays and rising shipping costs that have affected many.
“As we emerge from the pandemic the business is incredibly well placed to build on the excellent performance in FY22 with multiple new initiatives including the new website, workshop channel, further new stores and a subscription model which launches in the coming year,” says Hobbycraft chief executive Dominic Jordan. “However, we are conscious that the year ahead will be very challenging, particularly given the significant inflationary pressures on our customers and we are starting to see this impact on market demand in the early part of FY23.”
Full-year figures
The retailer this week reports revenue of £203.1m in its 2022 financial year, to February 20 2022. That’s 14.8% up on the £176.9m that it reported a year earlier. Adjusted earnings before interest, tax and asset write downs (adjusted EBITDA) came in at £15m. That’s ahead of both the previous year, when it reported adjusted EBITDA of £13.8m (+8.7%), and the year before that (£14.8m, +1.35%).
Hobbycraft’s stores were closed in the opening weeks of the year as a result of the third UK Covid-19 lockdown. The retailer says that from the point they reopened in April 2021 to the end of the year, sales were 11.4% ahead its pre-pandemic performance two years earlier, while like-for-like sales were 5% ahead of the same period.
Jordan says: “The financial year began during the third national lockdown and as a ‘non-essential retailer’ our stores were closed for the first seven weeks of year. Like other retailers we also suffered with ongoing supply chain challenges, particularly in the run-up to peak trade, and experienced a significant increase in freight costs which compounded wider inflationary pressures across operations.”
Investing for growth
“However,” adds Jordan, “we continued to invest to drive future growth with the development of our new website platform which launched in March 2022, as well as investing in our store estate with the opening of seven new stores. This past year also saw the launch of our new workshop channel with both online and store workshops adding a new revenue stream for the business, with exciting opportunities to grow this going forwards. Our performance underlines the strength and breadth of our offer and the truly cohesive multichannel model we have built over recent years.”
During the year, the retailer’s Hobbycraft Club has grown to 5.9m members, and it engages with both new and existing customers through targeted digital marketing, Facebook Live and YouTube. It also launched its workshop channel to add a new revenue stream and opened seven new shops, with the creation of 100 new jobs.
Looking ahead
The retailer also set out how it will respond to a decline in consumer confidence as a result of the cost-of-living crisis. A new subscription model promises to provide extra benefits to regular customers, while it will open new shops in Southend, Biggleswade and Bromborough, creating about 40 further jobs. It will also develop its in-store workshop and demonstration experiences further.
Sustainability
Hobbycraft says its ESG agenda remains a priority, with progress in areas from sustainable sourcing to removing packaging developing alongside maximising diversity and inclusion in the business.
