The Sunderland-headquartered company has reported a pre-tax loss of £9.1 million for 2023, marking its sixth consecutive year of losses. The latest financial statements indicate a deeper issue as the company’s losses have been widening year on year.
Despite a challenging domestic market, there has been notable international growth, particularly in continental Europe and Ireland. The juxtaposition of declining UK sales and international successes paints a complex picture for the company’s future.
Financial Performance
Outdoor clothing brand has reported its sixth consecutive year of pre-tax losses, with the latest accounts revealing a £9.1 million loss for 2023. This marks a significant increase from the £3 million loss reported in the previous year. The company has accumulated over £21 million in losses since it last turned a profit in 2017, when it posted a £1 million pre-tax profit.
Berghaus also disclosed a decline in turnover, falling from £81.1 million to £79.6 million over the past year. Despite the falling UK sales, the company experienced growth in international markets, particularly in continental Europe and Ireland, where combined sales rose from £10.3 million to £11.1 million.
Impact of JD Sports Sales
The company’s performance has been significantly affected by a decrease in sales through JD Sports. The decline in trading performance from JD Sports, which had a strong performance in 2022, has been a key factor in the reduction of overall revenue.
The Berghaus board highlighted in a statement that the fall in sales, combined with increased cost of sales due to inflationary pressures, contributed to the widened pre-tax loss. The straightforward nature of the business means that revenue remains the primary key performance indicator, with a noticeable decline in 2023.
Parent Company Challenges
Pentland Group, the parent company, has also encountered financial challenges. As the majority owner of the FTSE 100 group JD Sports, Pentland oversees a diverse portfolio of brands including Speedo, Canterbury of New Zealand, Mitre, Kickers, and Ellesse.
In recently filed accounts, Ellesse reported a turnover decline from £16.3 million in 2022 to £12.9 million in 2023. Pre-tax profits for Ellesse also dropped from £7.4 million to £5.8 million. UK sales fell from £8.5 million to £5 million, although the brand experienced growth in continental Europe and Ireland, with sales increasing from £1.8 million to £3.1 million.
Regional Sales Performance
Berghaus has faced varied regional sales performance, with international growth mitigating some domestic weaknesses. International sales, particularly in continental Europe and Ireland, increased from £10.3 million to £11.1 million.
Sales for Ellesse in the Americas rose from £269,000 to £391,000, while in the Asia-Pacific region, sales dropped from £1.8 million to £1.2 million. The brand’s performance highlights the fluctuating market conditions across different regions.
In other accounts, the company behind Kickers reported a slight turnover decrease from £23 million to £22.2 million in 2023. The pre-tax loss for Kickers widened significantly from £439,000 to £2.2 million over the same financial year.
Inflationary Pressures and Market Conditions
The financial strains experienced by Berghaus and its parent group can be attributed to inflationary pressures and challenging market conditions. The increased cost of sales, as noted in the company’s statements, has adversely impacted the bottom line.
Despite these challenges, the group continues to find areas of growth within its diverse portfolio. The ability to adapt to changing market dynamics remains crucial for resilience in the face of economic pressures.
Strategic Outlook
Looking ahead, the strategic focus for the group will likely involve bolstering international markets while trying to stabilise domestic performance. The group’s ability to leverage its brand portfolio could offer pathways to recovery and growth.
Engaging with varied market conditions and consumer demands will be vital for the sustainability of Berghaus and its associated brands. Strategic adjustments may be necessary to navigate the ongoing economic landscape effectively.
The consistent financial losses underscore the significant challenges faced by Berghaus. While international markets provide some relief, the company must address its domestic sales issues to achieve a balanced recovery.
Moving forward, it will be critical for the company to adapt to market demands and inflationary pressures. Strategic realignments could potentially turn the tide in favour of sustainable growth.
