Lulu Guinness narrows losses in competitive accessories sector

Lulu Guinness narrowed its pre-tax losses to just under £40,000 on sales of £9m in the year ending March 2016 following a strategy to close unprofitable stores. This improved performance compares to a loss of £225,848 in the prior year and the business has also revealed a planned move into footwear and other verticals.

Accounts filed at Companies House for the to year to 27 March 2016 show the accessories business posted sales of £9m (down slightly from £9.2m) and a gross profit of £4.1m. It had lowered its overheads during the financial year by around 6% and was thus able to record just a small loss of £39,817.

In its accompanying statement Lulu Guinness said competition in the accessories market remained "acute" with aggressive discounting from rivals and shorter full-price seasons. In addition generalist fashion retailers were moving into the accessories space thus encroaching on its core market.

It also cited high and rising rents in central London and elsewhere, which affected the ability to run profitable stores, changes in consumer spending, and credit, interest rate and exhange rate volatility in light of the Brexit vote as further challenges.

However the business is investing in its online channel and says it is close to launching a footwear line, which is the first move into a number of new verticals for the brand, which is best known for its handbags, including soft accessories, gifting and clothing.

The brand is also developing its international business and has opened stores in Taiwan and mainland China in partnership with Ruentex (it already had stores in Thailand) and says that mainland Europe is becoming an increasingly important wholesale channel.

Designer Lulu Guinness founded her brand in 1989. Today it operates stores in London's Covent Garden and the Royal Exchange in the City, as well as in outlet villages in Cheshire Oaks, Gunwharf Keys in Portsmouth and Kildare Village in Ireland. It has perhaps become best known for its iconic "Lips" clutch.