Newcastle fashion firm END. swings to loss after major restructuring in challenging year

A major restructuring at luxury fashion and footwear brand END. saw the business swing to a loss in a challenging retail landscape, accounts show.

END. was launched in 2005 from a small shop in Newcastle’s High Bridge Street and soon garnered a faithful following for bringing rare trainer brands to Tyneside. The firm has since expanded into a new flagship store in Newcastle, while also operating additional stores in Glasgow, London, Manchester and Milan.

Its founders Christiaan Ashworth and John Parker left the group ahead of its acquisition by new owners Apollo Global Management. It’s not known how much the company was acquired for last October but, before its acquisition, accounts outline how the directors considered current macroeconomic conditions and carried out an impairment assessment, “to assess the realisable value of the company’s investment” – resulting in an impairment charge of £778m. The impairment charge contributed to an operating loss of £665.5m.

The firm said: “The primary cause of this impairment stems from the macroeconomic conditions.” A report with results filed under Lobster Bidco Ltd, covering the year ended 31 March 2024, show revenue dropped 2.1% to £215.3m.

Directors cited the challenging retail sector for its drop in sales, but it delivered positive pre-exceptional Ebitda of £6.2m, down from £27.7m, thanks to promotions to help clear its stock levels and “several strategic changes and investments aimed at increasing operational efficiency and bolstering future growth initiatives”.

However, a rightsizing of the company’s warehouse operations and the closure of its Grainger Street store in Newcastle led to an overall Ebitda loss of £16.5m, down from profit of £12.4m. Its inventory value at the end of year was £64.4m, a significant improvement on the previous year’s £94.2m, and directors said they have invested and created jobs in key departments in the period, to support growth and to further develop the business for continued success.

The report said: “During the financial year ended 31st March 2024, the retail landscape remained challenging as macroeconomic pressures persisted both in the UK and abroad. High inflation and elevated interest rates weighed heavily on consumer spending.

“Targeted action was taken to reduce the overall stockholding and enable the consolidation of two warehouse facilities into a single location to right size the operations. Whilst there was restructuring in the year, the directors ensure that any redundancies were kept to a minimum.

“Where possible, employees were provided with alternative roles that suit their skills and needs whilst continuing to support their development.”

Following publication of the accounts, a spokesperson said: “2023 was an important year for END. as we accelerated our transformation following the implementation of our new warehouse management system and introduced new merchandising capabilities to rationalise and optimise inventory to reflect the post-Covid trading conditions.

“We have now fully integrated the new WMS and are seeing significant efficiencies and improved service levels. Inventory is now at very healthy levels and we are focusing fully on new season trading for SS25. Recent goodwill accounting adjustments reflect the current state of the market; however, the company’s underlying health remains robust.

“With a deleveraged balance sheet, we are well-poised to navigate the current market environment, execute our strategic business plans and ensure the company remains positioned for sustained success.