Hotter Shoes owner Unbound Group has posted revenue growth of 10.4 per cent to £27.6m in its first half to 31st July 2022. Gross margin has also expanded to 63.4 per cent, equating to growth of 180 bps over the prior year, driven by progress in its efficiency plan and delivery of product strategy, resulting in gross profit growth of £2.1m.
However, the business recorded an EBIT loss of £0.3m after costs incurred in the technical launch of the Unbound platform of £1.0m and non-recurring PLC costs of £0.15m.
The business says that its Unbound trading platform roll-out is on track with technical delivery and costs complete on schedule in July, with partner brands continuing to be on-boarded throughout Q3 and Q4. It had established an ‘always-on’ community of target consumers, ‘U_Space’, to fuel deep insight into their lifestyles, attitudes and behaviours, shaping the future development of Unbound Group. Further roll-out is underway, to position Unbound as the authoritative voice in the 55+ consumer group.
At Hotter Shoes, all channels showed growth YoY, with a notably strong performance in Retail +71.6 per cent, adjusting for COVID-related closures in FY22 +17 per cent.
The combination of its UK manufacturing facility and strengthened supply chain enabled Hotter to respond to changing consumer behaviour in-season, which – it says – has and will continue to benefit its performance in an unpredictable environment
For example, Autumn Winter stock availability for Hotter was at its highest ever levels for season launch and a continuous improvement culture has been expanded throughout the business, with targeted project groups working across departments, focused on efficiency and cost savings
The business said: “We have seen tougher trading conditions in recent weeks, the short-term outlook is very challenging to predict, given the volatility of the economic backdrop and resultant impact on consumer confidence.
“Medium-term growth objectives remain unchanged and, with 10 per cent sales growth achieved in H1 despite challenging economic circumstances, we remain confident, but recognise an increased short-term risk. Focus will continue to be on managing costs, protecting margins and cash flow, ensuring the appropriate levels of working capital and managing capital investment tightly.
“The launch of the Unbound platform will allow for a greater degree of revenue diversification over the medium term, in addition to growing and engaging with our active customer base. We have made good progress with partner brand sign-ups for Unbound, and will continue to focus on onboarding further complementary brands within apparel, with plans to introduce wellness categories in Q1 2023. As planned, Unbound revenues in H2 will be small in the context of the Group, with the focus being onboarding partners onto the platform.”
Given the challenging short term economic outlook we anticipate full year Operating Profit (pre-exceptional) will be between £nil and a £1m loss after H1 non-recurring costs of £0.7m
Ian Watson, CEO, Unbound Group plc, commented: “Unbound Group has delivered an encouraging first half performance that builds on the momentum of 2021, despite the increased challenges of high inflation and a volatile and unpredictable consumer environment. The combination of further growth in sales and gross margins demonstrates the effectiveness of our strategic initiatives and the value that our customers attach to our core Hotter product, giving us confidence despite the market conditions, which have become more challenging in recent weeks. We have made good strategic progress in H1 and will continue to focus on efficiency gains and cost management in H2 to protect margins. We are confident in our brand and the benefits that will result from this focus and our continued ability to deliver our strategy over the long term.
The broader revenue base we have created with the launch of the Unbound platform marks an important strategic shift for the Group. However, we remain mindful of the growing pressures on consumer spend. Consequently, we continue to review and adapt to the changing market conditions, maintaining our specialist focus on our core customer demographic of financially resilient 55+ consumers.”