Paul Smith sales and profits tumble but outlook for 2026 'remains positive'

Paul Smith saw gross profit drop 7% to £97 million for the year ending 30 June 2025, citing a “challenging environment for the retail sector” and a decline in wholesale demand.

A pre-tax loss increased to £16.7 million from £5.4 million, while group turnover during the year fell 8% to just over £181 million. Retail and e-commerce combined were down 3% at a little more than £102 million. Wholesale dropped 16% to £63 million, but like-for-like retail “remained constant”, with costs tightly controlled.

While retail and e-commerce sales combined fell, e-commerce sales alone increased by 14% year-on-year, “underlining the strategic importance of digital channels”.

Additionally, direct e-commerce sales accounted for 41% of total retail sales, up from 35% in the prior year, reflecting sustained growth in online demand.

The year marked a period of strategic transition and restructuring, as the business took decisive action to streamline its global wholesale channels while continuing to accelerate growth across retail and e-commerce channels, reduce discounting, improve gross margin and control overhead costs.

Internationally, the business has faced “significant trading pressures”, particularly in the US, where performance was impacted by operational consolidation and delayed order shipments.

Meanwhile, wholesale channels “remain problematic”, particularly in major markets, as partners continue to manage stock levels and liquidity cautiously. However, the business “remains positive about future growth” and continues to be optimistic about opportunities in North America.

Paul Smith is actively strengthening relationships with other key strategic partners to improve overall performance in FY2025/2026. In addition, the exceptional costs associated with restructuring and overhead reductions are expected to deliver “tangible financial benefits”.

Since the end of the 2024/2025 financial year, Paul Smith has implemented a clear strategy focused on fewer products, a leaner operating model and less discounting, in keeping with a global brand whose strength lies in distinctive design, British craftsmanship and brand heritage.

The past year also saw significant changes in the leadership group of the business. Ewan Venters, the former CEO of Fortnum & Mason, joined as Executive Chairman and will work alongside Sir Paul in plotting the strategic direction of the business, broadening and strengthening its collection.

Richard Woollams, who has been with the business since 2010 as financial planning and analysis manager, was promoted to Chief Financial Officer.

Following a strategic reset and the bolstering of its executive team, Paul Smith is entering a new chapter with “a refreshed offering that celebrates the brand’s heritage and creative vigour”. The AW26 collection, presented recently in Milan, was widely acclaimed.

Woollams said: “It is fair to say that, in common with many other similar businesses across the retail sector, we have found the past year challenging. But we are heartened by the growth in our e-commerce business, which reflects the investment we have made in this area.

“With the restructuring we have undertaken elsewhere, and the focus on a refreshed product range that plays to our strength as one of the great British brands, we are confident that these changes will lay the foundations for sustained profitability and long-term growth.”

The business has clear digital growth plans and, while believing in the power of the physical retail experience, continues to invest in online expertise, infrastructure, user experience and targeted marketing campaigns to support growth.