Inspecs revenue growth stalls, but order book is strong

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British eyewear specialist Inspecs’ full-year trading update on Thursday highlighted a challenging year that saw 2022 group revenue dipping to $246 million (it reports in US dollars) from $246.5 million in 2021.

Inspecs/Superdry

The company said the figures were “in line with revised expectations” as revenue for its existing business dropped 12.9% to $233.4 million but 2021’s acquisitions rose 12.4% during 2022 to $12.6 million.

Better news was the fact that on a constant exchange rate basis, revenue increased from $246.5 million to $270 million, an increase of 9.5%. 

The company operates globally and said that in Asia, its factories maintained production throughout most of the year, despite both supply chain and Covid-19 restrictions. Also on the positive side, China production volume actually increased in 2022 despite those restrictions.

Meanwhile, Norville losses narrowed in Q4 and “further progress continues to be made”. Its R&D department Skunk Works generated its first commercial income, and operational efficiencies are expected to deliver further benefits in 2023.

The company makes and markets its own brands as well as holding eyewear licenses for Viktor& Rolf, Barbour, Liberty, Henri-Lloyd, Superdry, Radley, Termperley and Ted Baker, among others.

It said it saw a decrease in order flow in Q3 following a slowdown in its German, French and other European markets, resulting in a reduction of sales in Q4. As a result, it launched a cost reduction programme to improve operational efficiency in 2023. 

But its other markets remained in line with management expectations and the group order book as of 31 December was $41.9 million, down only marginally from $42 million on a constant currency basis a year earlier.

The company said it saw “several headwinds in 2022, in particular a large decrease in the euro against the US dollar which had a material impact on the reporting of our European business”. 

Freight costs, which are now reducing, were at record highs, and material, product and operating costs all rose “significantly” in the year. Management is making good progress at Norville, having cut costs to streamline the business and are now focused on growing revenue. 

Inspecs added that it will continue to “seek operational efficiencies and reduce costs where appropriate while maintaining execution of its growth strategy”. 

It expects to start construction of its new manufacturing facilities in H2, funded from free cash flow, and stressed that it “enters 2023 with a good order book and is confident that it will enhance value for all stakeholders”.

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