The Perfume Shop profits fall but online sales race ahead

By

Sandra Halliday

Published
Jul 21, 2017

The recent rise in the UK’s national living wage has dented earnings at The Perfume Shop with its operating profits in the year to December 31 down 11% to £15.2 million from £17 million.

That fall came in spite of sales edging up 1.1% to £212.3 million. The sales rise was helped by a 33% surge in online sales as the company revamped its website and improved its product range.

The company is part of the giant Hong Kong-based AS Watson conglomerate, which also owns the Superdrug and Savers chains in the UK. Earlier this month Watson said it has plans to add 17 new Perfume Shop stores to the current 250.

In its latest business year, the company said a number of factors proved a challenge as well as the national living age with uncertainty following the Brexit referendum a particular issue. But it said the UK consumer environment was “supportive" overall.

In fact, while the clothing market has faltered in the past year, beauty has continued to prosper. This has been influenced by several factors with the ‘lipstick effect’, where cash-strapped shoppers treat themselves to smaller items, helping to drive beauty growth.

The selfie obsession of the British public has also been a beauty booster and while that hasn’t impacted The Perfume Shop, due to its focus on fragrance, it has encouraged new players into the market and existing companies to expand their beauty offer. The firm said the market is now more competitive as general merchandise and fashion chains have added to their beauty offer.

And with most of the products it sells being imported, it also said that the Brexit vote has added to its costs due to the fall in the value of the pound.