A few days ago I got in touch with Austen Pickles, an old friend in the fashion industry who runs Buxton Pickles, based in Ilkley, Yorkshire - god's own country.
How's business, I asked. This was the reply....
How is business??!! Thanks for asking… I haven’t got time to put it all in a polite coherent email right now because I can rant about this for hours and hours.
Basically business is bloody hard. Brexit has destroyed confidence in our economy and devalued our currency. Our company manufactures 80% of orders in Bulgaria and pays in euros. We sell these orders in sterling. Last year most orders were booked before June 23rd and delivered afterwards when the pound had collapsed. Our margin was halved.
It was a double whammy - Austin Reed went bust as well owing us almost £200k. We made a loss in 2016 for the first time ever (we have been going since 2001).
Our customers, womenswear retailers, buy most of their product from Far East in dollars and are therefore looking at significant cost rises which they don’t want to pass on to their customers.
We are now trying to put our sterling prices to them for EU production up to accommodate the currency devaluation. No chance. Our customers are fighting tooth and nail to keep prices down.
We have always been at the top end of our market price-wise because our quality is excellent and we use the best factories. But even some of the best retailers are starting to care less about quality and more about price. Our margin isn’t recovering.
Brexiteers are always talking about seeing the bigger picture and the longer term... P*ss off.
Everyone’s customers are unsettled. Womenswear retailers are a particularly anxious bunch. Austin Reed and Jaeger have gone. Who’s next….? Hobbs is for sale for £80m but will probably go for less losing 3i a lot of money. Coast and the remains of the Aurora Group are up for grabs. This is not a great environment to do business in. Unless you are an overseas investor and then you get a lot more for your dollar now sterling is so weak. The family silver is going to the South Africans, the Chinese, Americans…
And the economy is about to go into recession, possibly coupled with inflation and interest rate rises. None of this will help us ‘Take Back Control’ Boris.
Politically, we are in unheaval. And from a public perception point of view we have the least approachable PM in living history. What the hell is she doing in charge? Any comparison to Mrs Thatcher is like comparing Trump with Washington or Franklyn.
Hard Brexit is business suicide but she started negotiations saying what a difficult woman she was going to be and how no deal was better than a bad deal. Has she ever negotiated anything in her life? 1 v 27. The odds are not stacked our way. You don’t start by sticking up two fingers, it’s just dozy.
And even though it’s going to hurt even more, we do need austerity. The UK is £1.5 trillion in debt and is borrowing a further £50bn a year at the moment. The markets will start charging more interest soon as we are downgraded risk-wise. The country will struggle to meet repayments. At least Greece has the EU for support…
So we could be bankrupt but nobody is explaining this to voters. Old people will have to pay for their care because we are all living longer and longer but paying the same tax / pension contributions into the system. Young people have to pay for uni. The NHS and other public sector bodies will have to be more efficient and crazy final salary pensions will have to go. Big earners have to pay more tax. It’s simple maths but nobody is talking about it in simple terms.
We have a ridiculous situation where the government does not have a majority. The tories waltzed into an unnecessary election looking like a bunch of cock-sure spendthrifts up against a more generous allotment loving grandad figure who wants to give handouts to everyone and then bring hard left policies back (to finish us off).
And before I climb down off this soap box, our bank have been useless too. Fair weather friends for fifteen years who saw last year’s results and crapped themselves. Ironically it’s the same bank who the tax payer bailed out.
Sorry Matthew, I’ve nearly finished.
It’s not doom and gloom in our business because we are bloody good at what we do and we are busting a gut to do it. We finished 2016 on £6m and will do around £8m this time so 25-30% up. But we will only make a small return.
Shall I reduce the team to save money? Nope, they are an amazing bunch, talented, committed and fun. And super busy. We just have to be more clever.
We have to look for overseas business so less reliant on UK. We just booked our first order with South Africa. We have to go wider on products and sources so we are now selling a much wider range of products from a wider supply base on 3 continents. We have to develop our own brands to earn a bigger margin so our own range of ready to wear is coming soon. And we have to stop spending on anything that is not business essential which means my lovely wife does not get the new kitchen I promised and we are holidaying in Cornwall.
How’s business? Grrrrrr.
I better get back to work.
Top image: Dave Kellam/Flickr