The Belfield Group, which owns brands including Westbridge, Tetrad and Clinchplain, is due to publish its EOY accounts this week, and has noted that the principal markets it serves – the retail and leisure and caravan sectors – both saw a marked decline in demand in the year due to the impact on consumer spending from both high inflation and high interest rates.
Uncertainty in consumer confidence, combined with supply-chain and inflation pressures, created a difficult trading environment in 2023, which has impacted the whole industry, states the group, which recorded revenues of £112.6m in 2023, compared to £129.6m in the prior year – a reduction of -13.2%.
"This reduction in revenue resulted in an operating loss before exceptional costs of £2.8m, compared to a loss of £1.4m in 2022," Belfield continues. "The group’s gross profit margin decreased from 22.8% to 21.9% during the year, principally as a result of competitive pricing pressure, albeit partially mitigated by Business Improvement Plans (BIPs) margin savings."
That said, Belfield says its group-wide transformation programme continues to deliver improved operational efficiency and performance across all divisions, and it continues to enhance operational performance with tight cost controls: "Our BIPs have positively impacted in-year profitability by some £4.8m, or £7.3m on an annualised basis, partially offsetting the negative impact of the market-led revenue decline in 2023," Belfield explains.
"The revenue break-even level, driven by the BIPs, reduced to £114.7m in 2023 from £127.2m in 2022, and will ultimately bring the revenue break-even for the group down to circa. £80m by the year-end 2024, a fantastic achievement and solid foundations for significant future profitability.
"We have benefited from additional in-year funding to support our business transformation plan, including investment in a new wave of BIPs for 2024. The group’s stakeholders provided additional equity funding of £2m in March '24, with a new medium-term debt funding structure from Virgin Money providing additional headroom to the group of £0.5m.
"In August 2024, in order to further support the business through this transformational period, the group secured additional £1.8m from our major shareholder, £0.8m of additional short-term headroom support from Virgin Money, and a £0.3m unsecured loan from the Development Bank of Wales.
"We continue to pursue the business transformation plan, and despite the challenging trading environments we operate within, we are confident that, post restructuring, taking into account the positive impact of the 2023 and 2024 BIP programmes and recent new business from several major existing retail customers, the impact of which will be seen from the autumn 2024 season onwards, business profitability will improve significantly for the remainder of 2024 and into 2025, and we are actively planning for a very positive future for our group."
In August, Westbridge announced that it was making significant changes, driven in part by the impact of M&S’ decision decision to exit the furniture market in March (see related).
