Victoria Beckham’s fashion empire warns on ‘uncertain’ future
Victoria Beckham’s luxury fashion empire has warned on its future, cautioning that the group will have to seek emergency funding if its lenders demand their money back.
The former Spice Girl‘s up-market label returned a profit for the first time in the year to December but warned that the “material uncertainties” it faces could cast its future into “significant doubt”.
In its latest filings, Victoria Beckham Holdings said it has a “reasonable expectation that the group is able to manage its business risks successfully,” but added that “further financial support may be required from its shareholders to further assist in the implementation of the strategy”.
The group, which offers ready-to-wear clothing, eye wear and beauty products, also warned that it could be forced to seek emergency funding if some of its creditors came knocking.
The firm’s directors said it has a number of its shareholders who could demand immediate repayment for their loans.
“Should the shareholders decide to recall the loans, the group and company will require additional funding which is not guaranteed,” Victoria Beckham’s directors said.
“These events and conditions indicate the existence of material uncertainties that may cast significant doubt over the group and the company’s ability to continue as a going concern and therefore, they may be able to realise their assets and discharge their liabilities in the normal course of business,” they added.
The group’s auditors, accounting firm BDO, also warned on the risk of these loans, saying that they agree that the fashion brand’s future could be cast into “significant doubt”.
The collapse of luxury department store Harvey Nichols will also be weighing on the future of the former Spice Girl’s fashion empire.
Before it was bought by Frasers Group, the department store group’s administrators found that it owed Victoria Beckham more than £350,000. The fashion label can expect to recoup no more than 15 per cent of this debt, they said.
Beckham: ‘We’re not a celebrity brand any more’
Victoria Beckham Holdings has hit profitability for the first time in its 18 years of trading, posting a £3.4m pre-tax profit in the year to December. Revenue at the group jumped by 15 per cent to £130m.
“Victoria Beckham Beauty achieved one of its strongest years to date, led by continued category expansion, product innovation and accelerating global brand awareness,” the group’s directors said.
The firm said a recent Netflix documentary depicting Beckham’s development from a popstar to a fashion designer has generated “strong traction” for her labels.
Sales jumped by 48 per cent in the group’s denim range and its e-commerce traffic grew by 500 per cent year on year.
“We have all worked hard for a long time for this moment of profitability and growth,” Beckham told the Financial Times.
“We’ve been very transparent about the problems that we had in the business but have recovered and are now growing at a sensible pace. After 20 years, people don’t look at my brand as a celebrity brand any more.”