Seasalt sales rise as firm stays on growth trajectory

Seasalt has filed its accounts for the year to the end of January 2023 and they showed turnover rising but some profit measures falling as investment and one-costs hit the figures.

The Cornish lifestyle company’s turnover rose from £96.4 million to just short of £119 million this time with gross profit up to £60.7 million from £51.7 million.

Operating profit before non-recurring expenses dropped slightly to £5.5 million from £5.6 million with the company recording non-recurring admin expenses of £1.6 million. This meant that the figure after those expenses was a fall from the £5.6 million figure down to £3.9 million. And net profit was down from just under £4.7 million to £1.7 million.

The non-recurring expenses were linked to the company running a process to sell itself (which it decided to cancel as it said the time wasn’t right), as well as some one-off management bonuses.

Despite those headline figures showing lower profits, the firm said that overall, the year was a “strong one in difficult circumstances” as that 23% revenue growth shows.

It can be frustrating analysing UK company reports as by the time they’re filed, many months will have passed and it’s hard to get an up-to-date picture. But in the case of Seasalt, the company has issued updates post-January 2023.

Back in January, it said it set a “new record for the Christmas [2023] period” as revenue rose as much as 16% in the five weeks to 30 December. Physical store sales rose by 17% while online sales were up 11% compared to the previous year.

The Christmas performance meant that the company was upbeat for full-year sales in the 12 months to the end of January 2024 with a 12.5% increase expected. That would mean sales reaching £135 million.

Seasalt also said EBITDA would come in above £10 million, helped by like-for-like growth through stores of 10% and partner growth of 39%.

Looking back at the year to January 2023, Seasalt said its stores continued their post-pandemic growth trajectory with all types forging ahead of 2019 levels on a like-for-like basis and ending the year 13.6% up on that pre-pandemic period.

This was partly due to the acquisition of customers who were new to the brand, but also in part due to existing customers returning to physical stores and away from online.

In fact, this appears to have been more marked for Seasalt than for others in its sector. The company said: “We understand this high street bounce was experienced by a number of retailers, but we appear to have experienced a particularly pronounced version of it. As a result the stores have never performed better. They make a significant contribution to the profit ability of the company as a whole.”

It added that it has confidence in the continued role of its full-price stores, not just in terms of direct revenue but also the positive brand awareness they drive that assists its online business. During the year it continued its store expansion programme with two new openings, including its second store in the Republic of Ireland.

But of course, with all that in mind, the online business’s fast growth slowed down. That said, it managed to maintain its revenues on a par with the previous year and it remains the company’s largest channel, slightly ahead of its physical stores in terms of total revenues. Combined, physical and digital accounted for over 82% of its revenue and it continues to be committed to both channels.

The year also saw the company continuing to make “excellent progress” in growing its relationships with key strategic partners such as Next, Zalando and M&S. Overall, its partner activities represented about 9% of group revenues and more than doubled year on year. Most of these relationships are online but some also include physical stores, such as M&S where it’s represented in 38 of its UK stores. This relationship is particularly important in driving both awareness and sales as it said that many of its own customers are also M&S customers.

Not that the M&S chain is more important to it than Next or Zalando. In Next’s case it grew significantly in the year and it said it’s seeing “exciting” growth levels at Zalando, which is raising its profile in several European markets. It intends to continue working with key partners like this to help expand overseas and hopefully repeat the success it’s had in the UK.

The rest of its revenue was delivered by its wholesale channel, comprising multiple small accounts maintained by its network of independent wholesale agents in the UK and several international markets. It said this business is very stable and continues to play a part in its distribution strategy.

Other activity during the year included expanding its distribution centre operations with a new site near its existing one in Cornwall. It also successfully launched a new sale shop on eBay that now acts as its main outlet for any terminal stock that it hasn’t sold through its own clearance sales.