Profits hit at The Perfume Shop as labour costs rise

Helen Cahill
Follow Helen
Labour costs are rising due to the national living wage (Source: Getty)

Profits took a hit at The Perfume Shop last year as the retailer reckoned with rising labour costs from the national living wage.

The figures

Revenue for the year to 31 December rose 1.1 per cent, up from £210.1m to £212.3m. Online sales jumped 33 per cent, a rise driven by a revamped website and improved product range, the company said.

Operating profit came to £15.2m, falling 11 per cent from £17m in 2015.

The company paid out a dividend of £8.6m over the year, down 73 per cent from the £32.5m it shelled out in 2015.

Why it's interesting

The Perfume Shop said it was under pressure from the new national living wage and the uncertainty stemming from the EU referendum, but that overall the consumer environment in the UK had been "supportive".

The beauty market has outperformed clothing over the past year, which has benefited retailers like The Perfume Shop and Superdrug.

Read more: Superdrug thanks Kim Kardashian for profit boost

However, the popularity of beauty products has proved to be a double-edged sword. The Perfume Shop said it was facing more competition because general retailers and clothing retailers have been moving into its specialism. Over Christmas, for example, Debenhams said it was increasing the proportion of beauty products in its sales mix to cash in on changing consumer habits.

What The Perfume Shop said

"The impact of the UK's decision to exit the European Union has created uncertainty regarding future consumer sentiment and demand, and has created upwards pressure on costs arising from the devaluation of sterling," the firm said in its strategic report.

"In the longer term, uncertainty will also exist surrounding the access to the single market, taxation regimes and the free movement of labour."

Read more: Holland & Barrett's profit trimmed as it faces competition from grocers

Related articles