Hobbycraft profits have plummeted 80% despite sales growth

The arts and crafts retailer saw profits drop 80% to £393,000 for the year ending February 2024, down £2m on the previous period, impacted by inflationary pressures and one-off costs. 

Hobbycraft’s adjusted EBITDA reached £10.3m, down 3.3% on last year,  sales grew 3.4% to £218.3m, while like-for-like sales grew 1.1%.

The retailer’s gross margin rose 56.9% to 58.4%, driven by improved own-brand sales and price adjustments.

Hobbycraft said it would be investing £8.7m in new store openings and making improvements to its digital offer, despite narrowing profits. 

During the period, Hobbycraft opened seven new stores in locations including Canterbury, Glasgow, Lakeside and Southport, bringing its total store count to 119.

GlobalData retail analyst Aliyah Siddika said: “To stand out in a competitive market with value retailers like B&M, Hobbycraft is expanding its own-brand products and offering more online and instore workshops to reclaim its position as the preferred destination for crafting supplies and expertise.”

“The increase in operating profit signifies a positive development for the retailer, although it has not yet achieved pre-pandemic levels. As we come out of a period of high inflationary pressures, Hobbycraft must highlight the quality and expertise that underpins its offer to encourage consumers to trade up.”

This summer Hobbycraft was bought by Investment group Modella Capital for an undisclosed sum. The retailer was put up for sale by previous owner Bridgepoint, which had owned it since 2010.