Inspecs Navigates Challenging Market Conditions, Shows Promise for Second Half business, fashion, fashion news

Eyewear specialist Inspecs, headquartered in the UK, recently released its financial results for the first half of 2023 (January to June), revealing a decline in revenue but highlighting positive developments that suggest a stronger second half.

The company reported a 7.3% decrease in revenue to £103 million, attributed to exceptionally high sales recorded during the same period last year. However, adjusting for currency fluctuations, the revenue decline was moderated to 5.2%, reaching £105.4 million.

Despite the revenue dip, Inspecs demonstrated operational improvements with a significant 100 basis point increase in gross profit margin, reaching 52.4% compared to 51.4% in the previous year. This improvement was driven by cost-saving measures implemented across the business, resulting in a 3.6% reduction in operating expenses to £50.7 million.

While these positive developments mitigated some of the impact on profitability, underlying EBITDA decreased to £10.1 million from £12.1 million in the previous year due to lower sales volumes.

However, Inspecs demonstrated robust cash generation with £12 million generated from operations, up from £11.5 million in the same period last year. This strong cash flow contributed to a reduction in net debt.

The company acknowledged challenging market conditions but expressed confidence in its performance for the remainder of the year. Trading in the second half has exceeded the previous year’s figures, with the order book at the end of August 7% higher than the same period last year.

Inspecs highlighted key successes during the period, including the successful launch of a major eyewear brand into all stores of a leading global retailer and the expansion of distribution for a flagship brand into all Canadian stores of a prominent optical retailer starting in the fourth quarter.

The company’s investment in travel retail yielded positive results with a 45% revenue increase driven by strategic expansion into key global outlets. Furthermore, the construction of its new manufacturing facility in Vietnam was completed on time and within budget, with internal fit-out currently underway.

CEO Richard Peck emphasized the company’s progress during the period, highlighting improved gross profit margins across all divisions and strong cash generation. He also underlined the company’s commitment to cost optimization through operational efficiencies, particularly in the US market.

Peck expressed confidence in Inspecs” global distribution strategy, citing new partnerships with global retailers and expansion of existing relationships, leading to revenue growth in travel retail. While acknowledging ongoing challenges posed by inflationary pressures and market readjustments following competitor acquisitions, Peck emphasized the resilience of the optical market.

Looking ahead, Inspecs anticipates continued reduction in net debt during the second half due to lower capital expenditure following the completion of its Vietnam manufacturing facility investment. While maintaining a cautious stance regarding market conditions, the company remains focused on delivering cost-saving initiatives and fulfilling planned shipments in the fourth quarter.

Based on current performance and order book strength, the board expressed confidence in meeting full-year market expectations.