Fred Perry drives profitable growth despite full-price focus denting sales

On the surface, the latest set of accounts from Fred Perry (Holdings) look disappointing with turnover falling. But an increase in profits underlines the firm’s focus on profitable sales during 2024.

The business owns and manages the Fred Perry, Lavenham, and George Cox brands and operates retail stores in the UK and selected international markets.

Before we go into the company’s view of its latest trading year, let’s look at the headline numbers. Turnover dropped to £149.218 million from £154.128 million, although the cost of sales also fell. And gross profit was £77.3 million, down from £78.4 million a year earlier. 

But operating profit rose to £18.251 million from £14.108 million and pre-tax profit was up to £21.533 million from £18.425 million. Although the company paid more tax in the latest year (£5.6 million compared to £4.1 million) its net profit for the financial year was higher at £15.887 million compared to £14.303 million in 2023.

The group continues to have large cash reserves after the dividend payment to the holding company.

In its results filing, Fred Perry explained the turnover drop saying that it had grown the group by over 40% between the depths of the pandemic in 2020 up to 2023 (with Japan growing by over 30% in that final year). After such a big focus on driving sales higher, the strategic priority in 2024 was to “consolidate our approach, our collections, our ways of working and our inventory with a focus on full-price sales and full-price sell-through” in its own stores and with its “elevated and aspirational wholesale partners” around the world.

That approach meant that while 2024 saw a “strong performance”, the reduction in discounted sales led to the lower turnover figure compared to 2023, which had been the highest revenue performance ever reported by the group.

The company said that the latest figure “shouldn’t hide the key takeaway of the strengthening of the gross margin as well as a higher profit before tax percentage”. As well as the focus on full-price sales, those figures were driven by the improvement in stock purchase prices, consolidating the width of its quarterly collections, a continued focus on cost control and also the sales mix, with growth in margin-boosting products such as the “iconic” Fred Perry shirt.

In fact, “It all starts with the Fred Perry shirt” is one of the key brand mission statements. The company said consumers will “continue spending on things they’re most passionate about and that connect with them emotively. The shirt is a ‘brand ambassador’ for our own stores and online offering with ‘shirt walls’ in stores or high prominence on our social postings”.

Despite the economic pressures the company faces, it kept the retail price of this product the same through the inflation period of 2024 “with the support of it long-term suppliers and forward contract purchasing”. 

And it added that despite the downturn in revenue year on year, it was “reassuring to see the gross margin become stronger and in line with our future expectations, there was a lot of focus on purchasing at the right price and delivering a product in an efficient and cost-effective way”.

Of course, its products are about more than just the Fred Perry brand. It also said that the Lavenham brand benefited from its expansion into lightweight categories such as gilets and jackets, reducing the dependent on winter sales peaks. 

Diversification into small leather goods such as belts and wallets also supported more balanced trading throughout the year. 

And collaborations “increased brand awareness and relevance” while investment in machinery, work processes and quality control improved its factory efficiency and output.

As for George Cox, the group continues to focus on establishing and building its e-commerce revenue with growth continuing in 2024. Product development was a key area and it’s “actively working on options to provide better margins alongside an improved revenue line, particularly with the launch of its Portuguese-produced footwear”.