Hobbycraft has posted an 80% drop in profits for the year ending 18 February 2024, despite achieving sales growth and improved margins.
The arts and crafts retailer’s profit plunged 80% to £393,000, down from £2m the previous year, impacted by one-off costs and inflationary pressures.
Despite the decline, the retailer achieved an adjusted EBITDA of £10.3m, a 3.3% dip on last year’s £10.7m.
This performance was supported by improved gross margins, which rose from 56.9% to 58.4%, driven by strategic price adjustments and an increase in own-brand sales.
Sales edged up 3.4% by £7.2m to £218.3m, while like-for-like sales grew 1.1%.
Hobbycraft continued to focus on online sales and its click-and-collect services, which grew 32.1% compared to pre-pandemic levels.
The business also opened seven new stores in locations including Canterbury, Glasgow, Lakeside, and Southport, bringing its total store count to 119.
Despite its profit decline, the retailer is investing £8.7m in new store openings and enhancements to its digital offer, such as the launch of the Hobbycraft app.
Looking ahead, the business said it “continues to be in a strong position to drive growth despite the pressures faced by the UK retail market and is well placed to capitalise on the longer term recovery in consumer sentiment”.
It added its current financial year had started positively with further sales and margin growth.
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