OKA slumps to loss
Furniture chain OKA slumped to a loss last year, as restructuring and property costs wiped out profits.
The chain saw a pre-tax profit of £1.4m in the year to 27 January 2018 become a loss of £2.8m in the 11 months to 29 December 2018.
Restructuring costs totalled £1.46m and property dilapidations cost it £1.17m. It also wrote off £246,000 of stock.
Sales dropped from £28.7m to £26.3m. The chain said online sales had risen by 7% while in-store sales dropped 6%.
‘The year has seen several major steps towards this goal including investment into the leadership team to deliver across brand, technology and supply chain. In September 2018, OKA acquired Newsom Designs, a USA based multichannel furniture and home decor retailer trading under the Wisteria brand [for £3.18m]. This marks the first acquisition by OKA in its almost 20 years of operation. The investment in Wisteria is a strategic addition to OKA and has provided OKA with an immediate presence in the US with two retail stores trading as Wisteria as well as the entire back-end infrastructure in place, which will accelerate and de-risk the planned US expansion while providing procurement cost and marketing cost synergies.
‘In the UK, the general retail climate has been very challenging and total sales were broadly flat compared to last year for the 11 months period. The focus in the period was investment into our website which resulted in a 7% like for like growth against last year. Retail store performance was -6% due to market conditions and the partial closure of our flagship Chelsea store for refit. OKA opened a new store in Guildford in March 2018.
‘Margin has declined by 2.3% as a result of weaker foreign exchange rates and a warehouse sale event in 2018 to sell through customer returned items at discounted prices. ‘There have been a series of marketing initiatives to enhance brand awareness alongside investment into the OKA.com website including the development of the mobile site, launch of the OKA App and improvements to the site's functionality to improve our customers' experience. The business has invested in strengthening the management team, brand marketing and the development of the digital and instore customer experience. This has resulted in a planned increase in operating costs in both OKA and Wisteria.’