Hobbycraft, the arts and crafts retailer, has reported a significant decline in its profits for the year ending 18 February 2024, despite witnessing revenue growth and improved margins.
- The company’s profits fell sharply by 80%, impacted by one-off costs and inflationary pressures, reducing from £2m to £393,000.
- Despite the profit drop, Hobbycraft improved its gross margins and adjusted EBITDA, showing resilience in financial management.
- The retailer expanded its physical presence with seven new stores and a significant enhancement in digital offerings.
- Hobbycraft remains optimistic about future growth, underpinned by strong initial performance in the new financial year.
Hobbycraft, renowned in the arts and crafts sector, experienced a drastic 80% plunge in profits over the past financial year, ending 18 February 2024. This decline, taking profits from £2 million down to £393,000, can be attributed to one-off costs and inflationary pressures.
Nevertheless, the retailer managed to achieve a slight increase in revenue, climbing by 3.4% to reach £218.3 million. The adjusted EBITDA saw a 3.3% decrease, settling at £10.3 million, indicating a nuanced financial landscape. Despite these challenges, gross margins saw improvement, rising from 56.9% to 58.4%, driven by strategic price adjustments and an increase in sales of own-branded products.
Hobbycraft’s strategies to bolster its market presence included the opening of seven new stores in various locations, such as Canterbury, Glasgow, Lakeside, and Southport, expanding its reach to 119 stores. Furthermore, the business has placed significant emphasis on its online sales and click-and-collect services, reporting a growth of 32.1% relative to pre-pandemic levels.
The company is not only focusing on physical expansion; there is a considerable investment allocated to digitally enhance its business operations. This includes an £8.7 million investment in new store openings and digital upgrades, complemented by the launch of the Hobbycraft app.
Looking forward, Hobbycraft remains in a robust position to leverage growth opportunities, buoyed by a positive start to its current financial year, which has already witnessed further increases in sales and margins.
Hobbycraft, despite recent profit declines, positions itself strongly for long-term growth with strategic enhancements and market adaptations.
