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Mountain Warehouse has committed to an aggressive expansion of physical stores as it dismissed the death of the British high street and returned to profitability.
The outdoor retailer said it planned to open 50 shops next year following record first-half sales figures, driven by customers returning to its already growing number of stores after the coronavirus pandemic.
It opened 35 stores last year, taking its total to 370 across eight countries, and said on Monday that it would be opening a new shop every week in the run-up to Christmas.
“Despite what you read about the death of the high street, there’s a lot of life left,” said Mark Neale, founder and chief executive.
The retailer reported record sales of £171mn in the six months to the end of August and underlying profits of £6.7mn as customers flocked back to physical shops, compared with an underlying loss of £1.5mn for the financial year to February.
Mountain Warehouse reported the highest annual sales in its history last year but soaring freight and energy costs, which have now cooled, ate into its margins and left it with a loss.
“I think our freight bill went from roughly £4mn a year up to £20mn,” said Neale, but added that those costs had come back down since.
Two or three stores will be opened in Australia next year, adding to those it has in Europe, the US, Canada and New Zealand.
Private equity firm Inflexion, which also owns the Times Higher Education’s rankings unit, bought a 20 per cent stake in Mountain Warehouse in 2018 for £45mn, which Neale said at the time would “help turbo-charge our expansion plans, particularly overseas and online”.
Acquiring larger stores, as well as more of them, has become part of Mountain Warehouse’s strategy post-pandemic, which Neale said had been aided by the closure of Topshop and Wilko stores. The latter collapsed earlier this year.
“We’ve got more stores coming, and bigger stores,” he said. “We’ve got a number of shops that used to be Topshop that we’ve opened this year, one which used to be the Topshop in Norwich and is now a top shop for us.”
Larger stores became a target after Mountain Warehouse developed a much larger product range during the pandemic, when it was forced to shift to online sales only and was no longer constrained by the size of its shops.
“We’ve worked out now that we can actually expand our range in-store but we need the space to sell it,” Neale said.
Poor summer weather contributed to the group’s robust first-half sales and profit figures, with the retailer selling 350,000 waterproof jackets in July and August alone.
Mountain Warehouse said Black Friday weekend had seen a record return of shoppers. The company had its “busiest Black Friday weekend ever, with sales of more than £10mn and more than a million people visiting our stores,” it said.
Neale said the annual figures looked brighter because of those sales: “If I was talking to you on Friday morning, I’d be less confident than I am now.”
