Home and lifestyle ecommerce retailer Domu Brands has reported a growth in sales as well as narrowing losses.
According to its latest filed accounts for the year ended 30 September, total sales rose to £55.5m from £45.5m, although this was over an extended period compared to the year ended 30 June 2022.
UK sales represented £53.4m, up from £41.5m, while EU revenues were flat at £2m. USA sales were down to £52,000 from £1.9m, with the business exiting the market entirely upon period-end.
EBITDA resulted at a loss of £984,000, improving from a loss of £2.1m, with pre-tax losses also amounted to £1.9m, narrowing from a loss of £2.8m.
The company, owner of home accessories, DIY and furniture brand VonHaus, said: “FY23 proved another challenging year, with the business continuing to face several headwinds, directly and indirectly caused by the COVID-19 pandemic. However, despite a loss making year, through focusing on internal performance we were able to stabilise the financial performance of the business and return to profitability for the final 6 months of the financial period, between April and end of September 2023.
“Disruption to the global supply chain continued to play a factor in the ability to land products at the right price and at the right time. Through FY23, the well-documented supply chain issues continued to ease, but at a time when demand in key territories including the UK and EU started to decline due to the cost-of-living crisis. The cost of importing a container remained at high levels throughout the period, creating a perfect storm when committed orders started to flow, landing with extremely expensive freight rates, and at a time when demand started to constrict.
“The largest indirect impact of the supply chain issues was a change of mentality within the business. The business became extremely defensive, influenced by poor stock management and an overly conservative cashflow model. This resulted in the business being overstocked on slow moving lines and failing to hold sufficient levels of stock for the best performing products. This created a vicious circle of ever-decreasing performance during the first 6-9 months of the 15-month financial period.
“From mid-March 2023, the business changed its strategic direction, focusing on the demand planning process, correctly utilizing working capital, adopting a more expansive strategy, and raising the level of performance across all teams within the business. We once again began to look at opportunities to grow, instead of rationalising the operation. This was all achieved whilst continuing to sell-through overstocked positions.
“As a result of the factors highlighted above, the business exited the USA market at the end of 2023 and finished the period with stock of £8.3m, a reduction of £11.3m on prior year as a group and a consolidated business in UK and EU.”
