Foyles battles rate hikes and flooding to see turnover rise

Foyles battled flooding in its flagship store, a decrease in footfall following terrorist attacks in the UK and “significant” rates rises last year to deliver an overall increase in turnover of 6.4% to £26.6million.

However, after investing significantly in overhauling its supply chain and logistics systems, the mini-chain incurred an operating loss £68,000 for the year to 30th June 2017, down from a pre-tax profit of £131,447 a year earlier.

Paul Currie, chief executive of the seven-store chain, said Foyles’ rise in its turnover was driven by the opening of a new branch in Chelmsford in September 2016 and the “organic growth” of its flagship store on London’s Charing Cross Road, which it achieved despite being hampered by severe flooding in its basement in October 2016 during peak half term trading, which closed the shop for five days.

Other challenges in the period included a sizable hit to its business rates bill following the revaluation in England, which added up to a “significant increase in costs”, and reduced footfall, which Currie attributed to customers being cautious about shopping on the high street following terrorist attacks in London and Manchester in 2017.

“The year has been impacted by heightened terrorism awareness in the final quarter particularly as Foyles is a London centric business. This followed the attacks in London and Manchester, which did impact on footfall in a number of our key city locations,” he said.

However, despite the hurdles, Foyles saw a like-for-like increase in sales of 4.3% year-on-year in the peak trading month of December. It also benefitted from further economies of scale with an extra store in its portfolio and remained cash positive after investing in a new logistics and supply system, with an with EBITDA (earnings before interest, tax, depreciation and amortisation) of £490,656 (2016: £631,540).

In the current trading period, Foyles will continue to place service at the centre of its business strategy by investing heavily in customer service, training and staff professional development programmes, in a bid to ensure its high customer service values remained a point of difference when up against rivals in a “fast-changing retail scene”, Currie said. The company also plans to expand its reach online.

“We continue on the positive journey of sales growth, embracing change and operational improvement, in a retail scene, which is changing fast," he said. "It is our staff and their commitment to the business that allow Foyles to retain its position as an independent bookseller cherished by our loyal and growing customer base. Our mantra ‘welcome book lover you are among friends’ remains true to our values and purpose for existence.

“However, the fusion of physical stores and the embracement of technology will allow the business to expand its reach and operate on a tighter cost model. This is something that all progressive retailers need to embrace. Further investment in our e-commerce platform and marketing reach will help us maintain our credentials of remaining independent and customer-focused.”

He added: “We continue to work closely with our business partners in the industry in a collaborative way and appreciate and thank them for the support they have given us over the past year.”