Fragrance Shop smells sweeter after restructure
TRAFFORD Park-based retail chain The Fragrance Shop is to embark on a push for growth by opening 50 stores by the end of next year after a dramatic improvement in profitability.
Accounts for the company’s parent firm, Cartoon (Holdings), show that it increased sales by 3 per cent to £55.4m in the year to March 31 but it transformed a pre-tax loss of £4.1m last year into a profit of £5m this year.
The company’s owner, Sanjay Vadera, said that the turnaround had been achieved by gaining “better margins from our suppliers” and from a restructuring exercise which had seen it renegotiate deals with landlords of its sites, which are mostly based in shopping centres.
This involved putting two of its subsidiaries, Rock Oldco1 and Rock Oldco2, into administration in December in order to rid itself of onerous leases. The Manchester office of MCR was appointed as administrator.
Vadera said that it had taken the firm around a year to work through its entire estate to renegotiate deals with landlords areas where rent levels were deemed too excessive in the current climate.
He added that it had also made improvements in other areas of the business – installing a new website, building an in-house marketing function to improve store offers, increasing the sales and product training given to in-store staff and rationalising its product lines.
In total, Vadera said that the company achieved earnings before tax, interest, depreciation, amortisation and restructuring costs of £6.4m.
“It’s been a good year,” said Vadera.
“We didn’t have any structured training in place before, but product information is key and it’s vital to the brands we stock who want to ensure that our consultants are familiar with the products.
“We also discontinued some lines that weren’t giving us the return on the investment we need from our shelf space,” said Vadera.
The company now operates from 110 locations but finance director Peter King added that it is hoping to add an extra 50 outlets by the end of 2011 – 15 of which he hopes to open by the end of this year.
It has recently opened units at Dundee, Llandudno, Stafford and Brighton and is “looking everywhere” in terms of locations for potential new sites.
“There are lots of places where the chain isn’t at the moment, but it’s about finding the right sites at the right centres,” said King.
