Gymshark, the UK-based activewear brand, reported pre-tax profits fell 39 percent in its fiscal year ended July 31, 2022 as higher costs offset a 21 percent gain in sales, led by robust U.S. growth.
Pre-tax profits reached £27.8 million, down from £45.4 million the prior year, according to a filing with the UK’s Companies House. Gymshark said it was hit by one-off costs from setting up its U.S. distribution network, the flagship on London’s Regent Street, inflation, and increased discounting.
Sales grew to £484 million from £401.9 million. Sales jumped 25 percent in the U.S. to £228 million while sales in its home market in the UK increased just under 3 percent to £89 million.
Gross profit increased to £315.1 million, or 65.1 percent of sales, up from £282.2 million, or 70.2 percent of sales. Operating profit was down 35.0 percent to £29.5 million from £46.5 million while net profit plunged 38.2 percent to £22.5 million from £36.4 million a year earlier.
The results were affected by rising input costs, increased discounting and inflation, the company said in the filing. “Apparel businesses have been hit by rising input costs in their supply chains, including rising raw materials, fuel and labor costs, and the impact of increased freights and logistics costs.”
Gymshark added, “The decrease in profit before tax was driven by increased discounting, one-off costs with setting up the U.S. distribution centers, restructuring costs, Regent Street pre-opening costs, as well as continued investment in people and technology.”
In the filing, the company stated that all countries where it traded had been affected by the pandemic and the relaxing of societal restrictions, ultimately impacting consumers and businesses.
“The consumer has had more opportunities to apply discretionary spend to entertainment and travel, but inflation and rising costs are also affecting spending. Despite these pressures, the company has continued to grow its like-for-like external sales. The company remains profitable, though margins have been affected by the general economic environment,” said Gymshark.
Gymshark shared that consumers placed 13.9 percent more orders during the fiscal year while units sold increased by 27.5 percent.
Gymshark sells its products in 180 countries in 13 languages across 14 of its online stores.
Gymshark, which was co-founded by Ben Francis in 2012 and has a valuation of £1 billion as of August 2020 after raising £200 million in its initial funding round.
Photo courtesy Gymshark
