The Perfume Shop: ‘Cool efficiency’ helps retailer weather soaring costs

The Perfume Shop said that “cool efficiency” allowed it to weather a challenging retail market to grow its revenue to more than £300m, according to newly-filed documents.

The retailer, which is owned by the same Hong Kong conglomerate as Superdrug and Savers, CK Hutchinson Holdings, said its customers’ disposable incomes had been hit by inflationary pressures, creating a “strongly competitive” market.

Despite this, The Perfume Shop increased its revenue to £302m in 2023, up from just over £289m in the year before.

However, it was hit by “significant increases” to its costs driven by a sharp rise in wages and business rates which meant that the company’s pre-tax profit dipped to £18.6m from £21m a year earlier.

During the year dividends of £37.5m were paid to CK Hutchison Holdings. The Perfume Shop didn’t distribute anything to its shareholders in 2022.

The company refurbished 27 of its shops in 2023 and closed two existing sites which had reached the end of their lease, bringing its store count to 215.

The Perfume Shop ‘well positioned’ for growth

In a statement published to Companies House, The Perfume Shop said: “The directors expect that the UK retail environment will remain challenging and strongly competitive in 2024, with a heavy focus on price.

“Consumer sentiment remains subdued as inflationary pressures and high interest rates continue to impact disposable income, whilst at the same time businesses are seeing significant increases in their cost base driven by large increases in wage costs and business rates.

“However, with the right retail proposition and customer service there is potential for solid growth and returns to be achieved.

“The company’s strategies are designed to ensure its success in the UK market, maintaining its strong position and attracting footfall with its fragrances, services and focus on customer experience, both in-store and online.

“The robust trading performance in 2023, coupled with a clear future strategy and cash flows that can support investment, leaves the company well positioned to grow successfully in 2024 and beyond.

“In 2023 the business continued investing in the store estate as its sought to improve the customer experience further through personalisation, services and technology.”

The company added: “Cool efficiency is an important focus of the company, especially with the increase in costs arising from government legislation and inflationary pressures.

“Programmes to increase efficiency, innovate, automate and drive down costs will continue.

“The directors remain cautious but confident that by understanding our customers and providing access to luxury fragrance products which are great value for money and delivered with exceptional customer service, the business will continue to perform and maintain a strong position to deliver future growth.”

Who is retail giant CK Hutchison Holdings?

The Perfume Shop’s multi-national owner CK Hutchison Holdings is a Hong Kong-based group formed in 2015 through a merger between Cheung Kong Holdings and its main associate company Hutchison Whampoa.

The conglomerate has four core businesses – ports and related services, retail, infrastructure and telecommunications – which operate in more than 50 countries.

Its retail arm is the world’s largest international health and beauty retailer, with more than 16,300 stores across 28 markets.

The division includes A.S Watson Group, which owns UK brands including Superdrug, Savers, and The Perfume Shop.