The sales of Globe International Limited for 2022 were $274.5 million, 3 per cent higher than the prior comparative period. The group reported a small increase in sales and solid profitability despite challenging economic conditions putting downward pressure on both margins and consumer demand, particularly in the latter part of the financial year.
Sales growth was driven by the group’s major apparel and footwear brands, but this was largely offset by a reduction in sales of the group’s hardgoods brands. Despite the decline in the momentum of the hardgoods brands, they continue to trade profitably, and sales are significantly higher than they were prior to the pandemic.
From a regional perspective, the North American business drove the increase in sales, delivering a 9 per cent increase over the prior year in local currency terms. Meanwhile the more established Australian business experienced a 3 per cent decline in sales, partially impacted by extended lockdowns in the first half of the financial year. European sales also declined by 3 per cent in local currency terms, due to the contraction of the hardgoods market, the company said in a press release.
The $27.5 million EBIT reported for the year generated a return of 10 per cent on net sales, compared to 17.5 per cent in the previous corresponding year. Some decline in profitability was anticipated as it related to the normalization of the sales mix and an increase in the cost base to support the step-up in the size of the business that occurred during 2021.
However, there were additional factors that were not anticipated. This included major shipping delays in Q1 leading to cancelled orders, the softening of the hardgoods market from Q2, rising inflation and interest rates starting to take a toll on margins and softening consumer demand throughout H2, the strength of the US dollar, and the excessive cost of moving goods around the world.
“In the last quarter of the financial year we noticed a change in consumer behaviour as rising interest rates and inflationary pressures started to impact discretionary spending. We expect that this will lead to downward pressure on our sales trajectory into the next financial year, but we will continue to look for opportunities to grow and supplement our existing brands to maintain the scale we have achieved over the last 2 years. In addition, we will continue to do what we can to mitigate the impacts of inflationary pressure on our bottom line,” Hill said.