Notonthehighstreet Losses Widen in Year Of Investment
Notonthehighstreet.com has reported swelling full-year losses as investments in its technological capabilities offset rising sales.
The bespoke online marketplace notched up a pre-tax loss of £8.6m in the year to March 31 compared with a £3.8m shortfall the previous year, which it attributed to strategic investments in tech and brand positioning.
Notonthehighstreet recorded a 5.4% increase in revenue to £40.7m, bolstered by sales in its experiences division – including gin-tasting tours and swing dancing lessons - which more than doubled.
In contrast, sales in Notonthehighstreet’s core divisions including jewellery and home were largely flat.
Chief financial officer David Philips told : “We’re still growing in terms of traffic and sales, but it was a year of investment. The results was smack in line with our expectations and where the board wanted us to get to.
“We acquired over one million new customers last year and are on track to do the same again, but we’ve probably put a little more focus this year on talking to existing customers.
“This is a real destination for them to shop so we’ve made quite big changes to our website to cater to them.
“These have come into effect since the accounts ended and from where we have traded for the last six months versus a year ago there has been a quantum difference in profitability.”
Notonthehighstreet has seen a raft of senior exits over the last year including chief information officer Hugh Fahy, customer director Hannah Webley-Smith and chief executive Simon Belsham, who departed suddenly in September.
A search to replace the latter is ongoing, while the responsibilities of Fahy and Webley-Smith have been absorbed into the retailer’s existing team.
In a further efficiency drive, the retailer also kicked off a redundancy consultation in its head office towards the end of the financial period, resulting in approximately 20 job losses.
Notonthehighstreet, which raised £21m in venture capital funding from German technology company Hubert Burda Media during the period, said investing at the expense of its bottom line was necessary to get the business in a strong position for future growth.
“We raise money to spend it and to put into investment. We have spent over 25% more in technology year-on-year, which is a multi-million-pound investment,” Philips said.
“At the same time we’ve made sure that on an underlying trading level we have gotten the business where we needed to for profitability. The losses have increased but we spent our investment willingly and with our shareholders behind us.”
The retailer’s intangible assets, which included website developments costs, rose 20% £5.5m during the period.
Among the changes that Notonthehighstreet has made to its online offer are improvement to its mobile app and gift-finding capabilities for its desktop and mobile site, as well as a shift towards a more ‘thoughtful gifting’ proposition.
Chief commercial and partner officer Ella d’Amato said: “We’re moving towards a far more segmented view of our customer base because we have been guilty like many of pushing money into channels and not fully understanding their effectiveness.
“The biggest difference we’ve made is getting conversion up – we’ve walked away from traffic that wasn’t actually adding anything to our business and focused instead on getting the right people through the doors.
“We’re really confident that some of the decisions we’ve made throughout the last year are starting to put us in good track for the end of this financial year.”