M&Co profits fall as ‘unprecedented trading challenges’ bite

M&Co chief executive Andy McGeoch said, however, that the retailer has a “robust blueprint” for long-term growth.

The value fashion specialist reported a fall in EBITDA from £10.8m to £8.7m in the year to February, when total sales across all channels slipped 4.1% to £202.8m. Store like-for-likes declined but online sales advanced 2%. Operating profit before exceptionals fell from £6m to £3.6m.

Family-owned M&Co, which has 280 shops, opened three stores last year and shut 11 unprofitable branches. The retailer also extended its range, which had been a priority, with the launch of the Khost Clothing and Sonder Studio brands. The new brands increased choice for existing customers and “allowed access to new market segments”.

Over the last two years, M&Co invested £13.7m in improvements such as an upgraded ePos system, new software “to improve performance in-store”, and an increased online warehouse capability. Net debt was cut by £10.5m to £8.7m.

McGeoch said: “In the face of unprecedented trading challenges the business has delivered a solid performance over the last financial year. Our low net debt, committed bank facilities and strong balance sheet have enabled us to deliver continued investment and improvements in all areas of our operation.

“Like most retailers, we are feeling the impact of the widely reported economic and political uncertainty in the UK, and while this puts pressure on margins we are confident that we have a robust blueprint for long-term future growth to navigate these complexities.”

In its annual report submitted to Companies House, the retailer also said that it had assessed the implications of a no-deal Brexit.

It said: “The group sources nearly all of its product from outside the EU. It expects the duty rates that will be put in place by the Government in the event of a no-deal Brexit not to be disadvantageous to the group.

“The group’s key concern is the ability of the Government to keep UK ports operating efficiently, in the event of a no-deal Brexit, allowing the flow of goods into the UK in a timely manner.”