The sales of activewear brand Gymshark have increased by 20 percent compared to last year. This is ahead of the projected 15-percent increase in revenue, which will reach £556 millions in 2023.
Ben Francis, a 31-year-old Solihull businessman, has just filed accounts that show profits before taxes for the fiscal year ending in July last year fell by 53% to £13.1 million . This is the second consecutive year of decline.
The company described “tough trading circumstances” as a reason for the decline in gross profit margin. It fell from 60% to 60%. Earnings were up 14 percent to £45.3 million before accounting, tax, interest and other items. For the fourth consecutive year, no dividends were paid, but the highest-paid director was given a salary of £968,000. This is up from £519,000 the previous year.
Francis, who is said to be worth £900m, owns farms and is close friends with Kaleb cooper of Clarkson’s Farm. In the strategic report, he said that he was “confident in our ability” to continue growing our business and improving its profitability.
He said that the “previous growth trajectory…will not continue in the similar way”, but that the sales for the current trading year were 20 percent higher than last year’s comparative period.
Gymshark said that it has not experienced a decline in its conversion rate of visits to their websites into sales. It also stated that it was looking at new overseas markets and expanding its product range. It announced in January that it would open a 7,000 square foot shop at the Westfield Stratford Shopping Centre to complement the one opened in central London’s Regent Street shopping center in October 2022. It also plans on opening shops in New York, Dubai and other cities.
It confirmed it had reduced its North American workforce from 125 people to 40 and closed offices in Hong Kong, Mauritius and Mauritius. These actions cost the company around PS4million. Gymshark generated £250million in sales from North America last year. The company also leased its large distribution center in Pennsylvania. Overall, international sales rose 12.5%, down from 16.7% the previous year.
Gymshark’s value was more than PS1billion when General Atlantic, an American private equity company, acquired a 21% stake in 2020. Francis owns 70% and the remaining 20% is owned by current and former management.
The company is working on ways to reduce the use of virgin nylon and polyester, which are its two most-used raw materials. It’s also putting together “a preferred materials listing that will ensure we don’t rely on virgin synthetic fiber”.
Stephanie O’Neill announced her resignation earlier this month after seven years as Gymshark’s female head of brand. Matt Dunn, the former ASOS Finance Director, was recruited to fill the same position last year. Stacey Cartwright is the former chief executive at Harvey Nichols.
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