Profits at Gymshark slid just under 40% in the year to July 2022 as the online sports retailer wrestled with soaring production costs and squeezed consumer incomes.
The Birmingham-based business, which last year opened its first physical store on London’s Regent Street, posted a 38.7% drop in profits as it was forced to slash prices despite a jump in the cost of raw materials and shipping.
Revenues in the year rose 21% to £485 million, led by a 25% jump in turnover in the US to £228 million. Sales growth in the UK was more muted, rising just under 3% to £89 million.
Gymshark said: “Apparel businesses have been hit by rising input costs in their supply chains, including rising raw materials, fuel and labour costs and the impact of increased freights and logistics costs.
“The consumer has had more opportunities to apply discretionary spend to entertainment and travel, but inflation and rising costs are also affecting spending.
“The decrease in profit before tax was driven by increased discounting, one-off costs with setting up the US distribution centres, restructuring costs, Regent Street pre-opening costs as well as continued investment in people and technology.”
Gymshark, which was co-founded by entrepreneur Ben Francis in his parents’ garage 2012, has since swelled to more than 900 employees worldwide. The firm hit a valuation of £1 billion in August 2020 after raising £200 million in its inaugural funding round.
CEO Francis, aged 30, continues to own a majority stake in the company and has a net worth of £569 million, according to an Evening Standard analysis.
