Disappointing sales performance by surfing brand Hot Tuna
Hot Tuna (International) PLC, leading surf wear and fashion brand, announces its final results for the year ended 30 June 2011.
OPERATIONS AND FINANCE REVIEW
This report covers the Company's trading results for the year ending 30 June 2011. Overall it has been a disappointing year with decreasing sales over the year across all our geographic regions, resulting in an operational loss prior to exceptional items of £0.86 million.
Operational costs remain controlled at the lower level carried forward from 2010 and have little scope for further reduction. In the event of the business continuing, it is the Company's intention to realise further cost savings by entering distributorships and targeting online sales going forward.
Design & Product
The Company retains Hot Tuna's core brand values of edgy surf/streetwear while seeking to utilise the brand's classic heritage. New suppliers have been sort to provide the highest possible quality within target cost brackets.
The coming Autumn/Winter range focuses on clean, classic, quirky and humourous designs on high quality natural products.
The summer 2010 trading period showed signs of mild recovery with product being delivered to new accounts in Italy generated by the Italian/Austrian distributor. The product was delivered on budget and within customer delivery windows.
The UK e-commerce customers reflected slight increases in their modest sized orders as retailers and e-tailers reduced stock holdings and became cautious in product being stocked. Further sales where generated by old seasonal stock being discounted and channelled through markets where full price merchandise was not sold.
At the end of the summer 2010 season Italian retailers had reported good to very good sell through on product and the outlook for 2012 season looked promising. UK e-tailers reported fair sell through in line with UK retail market conditions. UK was signalling a general slowdown pushed in part by UK summer conditions and the start of softening retail numbers.
UK accounts purchased product very late after production had been confirmed and in some cases individual styles were not able to be produced due to late purchasing, although online retailers both suffered and prospered from the harsh weather conditions over the start of 2011.
During the financial year the European market showed a decrease in turnover from £0.12 million in 2010 to £0.06 million in 2011. As such, the Company is focusing on rolling out its e-commerce strategy and repairing relations with our prior customer base.
While sales for the 2012 period to-date are up on the same period last year the difference is not significant and we expect European sales for 2012 to be in-line with 2011.
The Australian market reaction to the new season adult range was positive at tradeshows and a modest increase in the number of accounts buying reflected this. Discounting of old children's range product continued and previous seasons recalled product was returned in to the discount market as 'seconds' product. The children's range was not put back into the market, instead a concerted effort was made to establish back into the market the adults range.