The boss of Hamleys has insisted the iconic toyshop is on track to become profitable again after the tough UK market left it nursing a £12m loss.
Chief executive Ralph Cunningham said a drop in consumer confidence, coupled with Brexit uncertainty and the fallout from terror attacks in London had created “one of the most challenging years in UK retail history”.
Despite the pressure, he said efforts to cut costs and invest in its international franchise stores meant profitability had “improved significantly” during the current financial year.
Hamleys recorded a loss before tax of £11.9m for the year to December, down from a £2.6m profit in 2016. The fall was partly caused by one-off costs linked to a restructuring and store closures.
Mr Cunningham said the 258-year-old retailer had “more to do”, but he was encouraged by its performance in first eight months of 2018.
He said: “Hamleys was not immune to the impact of Brexit uncertainty, macro-economic pressures, a general erosion in UK consumer confidence and falling customer footfall due to the threat of terrorism.
“However, 2017 is now behind us, and our transformation plan is well on course to return the business to profitability. We have made substantial improvements to strengthen and consolidate the business, with an unwavering focus on improving profit, cash and sales.”
Revenues edged 3pc lower to £66m for the year to December, as it axed a number of loss-making stores.
The changes saw it exit markets in Ireland, Denmark, Sweden and Norway, but increase its international footprint by opening an extra 26 franchise stores. It has more than 130 stores worldwide, including 50 franchise sites in India.
Mr Cunningham said UK like-for-like sales, which strip out new stores, had grown by 2.7pc in the eight months since the full-year update.
Hamleys is the oldest toy shop in the world, launching its first store in Holborn, London, in 1760. It was bought by China’s C.Banner for £100m in 2015.
According to its latest accounts, the toyshop was handed a boost after C.Banner waived the interest on a shareholder loan and extended repayment terms by three years to help Hamleys cope with the challenging UK market.
C.Banner was on the brink of rescuing House of Fraser earlier this year before calling time on a £70m lifeline when its share price plunged on the Hong Kong stock exchange.
Maplin, Toy R Us and Poundworld have already collapsed this year, while Mothercare, Carpetright and New Look have closed shops.
Source: Yahoo Finance UK