The Fragrance Shop posts robust performance during Covid pandemic

The Fragrance Shop posts robust performance during Covid pandemic
The Fragrance Shop said the shape of the business has "changed dramatically" in the last 12 months, accelerating its transformation into a “phygital” retailer.
// The Fragrance Shop sales fall 4.7% in year to March 31
// Online sales growth of 164% help offset impact of lockdown
// In-store sales for the year down 47%

The Fragrance Shop has posted robust trading for its financial year to March 31, despite being forced to close its stores for the majority of that period.

The retailer said a “significant growth” in online sales largely offset the expected decline in in-store sales because of the series of enforced lockdowns amid the Covid-19 pandemic.

The Fragrance Shop added that the shape of the business has “changed dramatically” in the last 12 months, accelerating its transformation into a “phygital” retailer, with a high-growth ecommerce arm complementing its physical store network.

This transformation saw the fragrance retailer shift its focus to online operations – including the re-purposing of stores during lockdown to offer a “click and fulfil” service to limit the need to place staff on furlough, and to better manage stock levels across the whole business.

The move helped The Fragrance Shop’s ecommerce sales skyrocket by 164 per cent in the financial year.

The Fragrance Shop also said proportion of sales from its online channels almost tripled from 20 per cent of the overall total to 56 per cent.

However, overall sales fell by 4.7 per cent as the retailer faced a sharp drop in footfall in town centres and shopping centres and the impact of three lockdowns.

As a result, in-store sales were down 47 per cent during the full-year period.

Despite the lockdowns, The Fragrance Shop still opened one new shop, taking its estate to 199 stores, and now expects to open six more this financial year.

The retailer said that overall, gross retail sales for the year came in at £128 million, while EBITDA was £15.4 million.

Bucking wider retail trends, The Fragrance Shop said it still expected a thriving store network to be a major part of its future after the pandemic, citing the sensory experience that comes with shopping for perfumes.

However, it also warned that footfall in town centres would remain subdued “for some time” and that the retailer would adapt to address this new environment.

The Fragrance Shop is working closely with landlords to agree terms that mean shops can remain economic and part of a recovery on the high street.

It has successfully renegotiated leases on a turnover model with around half of its landlords aligning property costs to future expectations on footfall.

“Unprecedented times have presented us with enormous challenges, but I couldn’t be prouder of the way everyone in the business has pulled together to get us through this difficult period,” The Fragrance Shop chief executive Sanjay Vadera said.

“A combination of self-help and government support, for which we are grateful, has steered us through turbulent times and left us well placed to rebuild, as the economy gets back on its feet.

“The work we’d already done on strengthening our online platform provided the foundations on which we were able to grow our digital offer to meet the dramatic change in customers’ shopping habits.

“This shift to online shopping is only going to grow stronger and we see this as a big opportunity.

“We’re under no illusions that the coming months will still bring challenges, we’re already welcoming customers back through our doors and playing our part in the high street’s recovery.”

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