Stella McCartney narrows losses as revenue jumps

Stella McCartney Limited has filed its results for its latest financial year and they show the company bouncing back from the pandemic, although still loss-making.

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McCartney’s label (like that of Victoria Beckham, which has also just reported its results), remains relatively small compared to the global giants of luxury fashion. But McCartney — and Beckham — have profiles that transcend the size of their operations and are more closely watched than businesses of similar size. 

So what do the results tell us about McCartney’s company? Revenue jumped 23% to just over £40 million. Turnover had been £32.5 million in the previous year.

Diving deeper into the revenue figures, profit sharing with Stella McCartney Italia SRL amounted to £22.8 million, which comprised 57% of revenue. Royalties reached £10.8 million, accounting for 27% of revenue, and benefited from £3 million additional cash from the Stella McCartney Kids license (it had signed a license deal with Simonetta SpA for its Kids line in 2021). Meanwhile physical store sales rose to £6.3 million, which took up 16% of overall revenue. 

As mentioned, the firm still isn’t profitable. However, the operating loss showed a strong improvement versus the previous year, shrinking to £8.76 million from £30.3 million with the company saying this also was a sign of it “confirming the trajectory towards break-even”. The reduction in the operating loss was down to significant improvements in the gross margin, “driven by adjustment in business formula and by a decrease in operating expenses by 17%, which was driven by rationalisation of structure and costs”.

The pre-tax and net losses were £10 million compared to £32.7 million a year earlier.

Clearly, the fact that consumer fashion shopping began to normalise after the shock of the pandemic was a major factor. But the company’s results were also affected by it continuing the strategy it began in 2020. 

The aim of this is “nourishing the brand appeal through the most desirable products”, with it saying that the label has “remain rooted in its strong fashion and sustainability values”. It added that the ready-to-wear offer continued its “fashion elevation, coming back to the DNA codes of the brand but also flourishing into artistic collaborations” with Franck Stella and Yoshimoto Nara — with capsules presented during the two fashion shows held in March and October 2022 in Paris.

2022 was also marked by the renewal of its long-standing collaboration with Adidas and by the launch of skincare in August of that year, “as a responsible alternative to the luxury skincare market”.

The business didn’t open any new stores during the year, with the total number of directly operated locations remaining at just two. But it focused on “like-for-like business and local clienteling initiatives… in order to mitigate the low level of international tourism”.

 And it executed some strategic projects such as its online customer experience continuing its upgrade during the year following the termination of its partnership with YNAP in 2021.