AllSaints sees record profits as its focuses on margins, US is strong for John Varvatos

AllSaints seems to be on a roll and shortly after announcing a new creative director and a raft of new stores, the company (which also owns John Varvatos) has now turned in record profits.

Despite the tough backdrop, the year to 1 February saw EBITDA rising 1% to £69.5 million, “reflecting the benefit of margin improvement initiatives”.

So let’s look at the details. Like another UK business that reported on the same day (The Very Group), the company achieved higher earnings despite turnover declining as it focused on profitable sales.

Total group revenue dropped 4% to £441.3 million, “following a deliberate reduction in promotional and markdown activity, designed to improve the quality of sales”.

AllSaints revenue was down 5% to £372.4 million while John Varvatos was up 4% to £68.9 million.

The gross profit margin increased to 65.2% from 63%, even though sales this time included a higher wholesale mix, which is typically lower-margin.

The company said the year was marked by “shorter markdown periods in retail, earlier seasonal launches extending full-price selling, and effective inventory management throughout the year”.

Key numbers included the aforementioned pre-operating exceptional EBITDA up 1% to £69.5 million, plus profit before tax up 55% to £28.2 million and profit after tax up an astonishing 93% to £18.9 million.

The year included the launch of a range of “successful and innovative products”, such as ‘smAIISaints’ childrenswear, a new AllSaints fragrance collection and men’s tailoring and underwear collections — as well as an optical eyewear range, following the successful launch of sunglasses in 2023.

It also opened a new third party-operated European distribution centre in the Netherlands, which has “supported strong growth across Europe with both new and existing concession and wholesale partners”.

And it continued to invest in new stores such as its first AllSaints new concept store in Manchester Trafford centre that saw “positive feedback from customers”. Other new stores during the year included London Bridge station, Glasgow’s Silverburn and Princes Square malls, Belmont Park Village in New York and Metzingen in Germany, as well as a new John Varvatos store also in Belmont Park Village.

The year saw a new creative director for John Varvatos too with Karl Aberg having started with the SS25 collection.

Much more recently, Aaron Esh was appointed creative director of AllSaints itself and it has opened new stores in Shenzhen, China, Atlanta in the US, and in the UK at St Pancras International and Bristol Cribbs Causeway. This autumn will also see further openings. And John Varvatos has opened a new flagship store in SoHo, New York.

CEO Peter Wood said: “Huge credit is due to our teams around the world. While our group revenue reflects our decision to reduce markdown activity to improve the quality of our sales, we’re pleased that a number of areas across the business continued to deliver strong top-line growth.

“Revenues at John Varvatos rose, helping to deliver its best-ever profit performance since we acquired it in 2021 — a testament to the strength of this fantastic modern American luxury brand. Wholesale also delivered strong growth, supported by partner expansion and our new EU distribution centre, making continental Europe our fastest-growing market.

“Despite the challenging global environment affecting all businesses over the past year, our continued investment in our talent, as well as in product, marketing and distribution, means we are reaching more customers than ever before. There remain plenty of exciting growth opportunities for both AllSaints and John Varvatos.”