Sales at The Entertainer rose by +10% over the last year, although the retailer said it had been affected by socio-economic conditions.
Although sales were encouraging, profits were affected. The Entertainer has reported that pre-tax profits fell from £22.5m to £7.6m, despite the company experiencing nearly a +10% increase in sales.
The toy retailer’s sales showed an increase of +1% on pre-pandemic levels, for the year ended 28th January 2023. While store sales were “up significantly”, the business noted online sales had dropped in comparison to the previous year. However, they were higher than pre-Covid.
The Entertainer told Toy World: “In the year ending January 2023 The Entertainer made a pre-tax profit of £7.7m. Whilst this was down vs the prior year of £22.6m, the past three years’ financial performance has been polluted by the impact of the Covid-19 pandemic (store closures and artificially low operating expenses to protect cash reserves during the period of uncertainty).”
The report said The Entertainer had been hit by socio-economic conditions over the year, commenting: “Despite having prepared for a post-pandemic recovery, the cost of living crisis and Ukraine war impacted shopper demand, especially during the second half of the year.”
The Entertainer said it had now prepared for a challenging year ahead as customers continue to be challenged by record levels of inflation. “As a result of the last three years of unprecendent challenges, the business and its teams are now stronger and more resilient to the constantly changing retail landscape,” the report added.
The business said it ‘remains cautious about the short-term outlook but remains in a strong position to overcome these challenges and prosper for the long term.’
Speaking to Toy World, The Entertainer commented: “During the last year, the business has been focused on returning to pre-pandemic levels of performance and investing for the future. When compared to the year ending January 2020 (the last ‘clean’ year) sales were up 1%, and in-line with the industry performance, according to Circana.
“Sales over the last three years have been erratic, with trading in like-for-like shops up or down depending on their location in relation to post-covid working patterns. Web sales continue to exceed pandemic levels and are greater than in the year ending January 2020.”
To add further context, CFO Martin Rothwell explained: “Our profit before tax was £7.7m vs £10.9m for the year ending January 2020. Included in last years number was a much higher level of donations made by the business compared to the year ending January 2020 (donations were limited at the end of year ending January 2020 as the business was uncertain about the news coming out of China in what turned out to be the start of the pandemic). Adjusting for this variance, the pre-tax profit for last year would be £8.5m vs £10.9m. The balance of the profit variance is driven by higher energy costs (shop, head office, warehouse and fuel costs to run our vehicle fleet), 19.5% increase in the national minimum wage over the last three years, and investment in our operational board numbers as we plan for future growth, balancing the Grant family’s changing roles.”
Earlier this month, The Entertainer announced the appointment of Andrew Murphy as group chief executive officer. The outgoing John Lewis Partnership COO resigned from John Lewis last year after 30 years at the helm, and will officially join the business on the 16th October.