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Hobbycraft Profits Down After Investment in Retail Initiative

By Sarah Jane 23 Sep 2014

Large chain retail group, Hobbycraft has revealed a loss of £6.5m in profit having earned just £7m in the 52 weeks ending February 23, 2014.

Sales reached record levels, growing by 9% for the fourth consecutive year to £129.6m. However, implementation costs of the final stages of the group’s change programme, together with the margin effect of realigning prices to be more competitive in the market, impacted EBITDA (Earnings before interest, taxes, depreciation, and amortization). As a result the craft retailer’s EBITDA fell 52% from £13.5m to £7m.

Chief executive, Catriona Marshall, said: “Our performance in 2013/14 reflects investment in infrastructure and the implementation costs of the final stages of the group’s change programme to put in place our new supply-chain and online trading platform.

“We are now using this investment to grow store sales and our online presence, where we have already seen sales more than double for each of the last two years.”

The stores estate grew to 79 stores, with new and established stores reflecting the latest developments to its merchandising. The company feels these have been well received by new and existing customers.

Hobbycraft plans to continue to broaden its customer base, with a focus on mums who craft for themselves, as well as kids. Its focus on the customer saw continued introduction of new products across most categories, offering increasing value in difficult times for the consumer.

At the start of 2013, Hobbycraft relocated its web fulfilment facility from Northampton to work alongside its new distribution centre in Burton. With an increased range and re-designed layout, the retailer then re-launched its transactional website, which has improved functionality including the option to collect orders in store.

Hobbycraft believes the investments it has made are enabling it to accelerate online growth and connect with customers through a new database and CRM programme, in a market where consumer confidence is growing.

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