Hobbycraft profits plummet 80%

Hobbycraft has reported an 80% drop in profits to £393,000, down from £2m the previous year, for the 52 weeks ended 18 February 2024.

The art and craft supplier attributed this loss to inflationary pressures and one-off costs that have impacted the retailer’s financial health despite their efforts to drive top-line growth.

Its adjusted EBITDA also declined 3.2% to £10.4m. However, total revenues increased 3.4% to £218.3m with LFL sales increasing by 1%.

Gross margin rate also increased to 58.4% from 56.9% in the prior period. The improvement in margin rate resulted from selective increases in retail prices, a reduction in freight costs, growth in own brand sales participation which increased to 45.5%, as well as effective stock management.

Additionally, Hobbycraft’s online and click and collect sales remained well ahead of pre pandemic levels at 32.1%.

The group opened seven new stores during the period in Canterbury, Glasgow, Lakeside, Maidenhead, Poole, Southport and Wigan, taking the total number of stores to 119.

It has also invested £8.7m in new store openings and enhancements to its digital offer, such as the launch of the Hobbycraft app.

Matt Davies, chairman of Hobbycraft, said: “Although we remain conscious that the period will continue to pose challenges. I have confidence that the business is well placed to capitalise on the longer-term recovery in consumer sentiment.”