The UK arm of kitchenware brand Smeg suffered lower than expected sales during its latest financial year after increasing interest rates ‘stifled demand’ for its products.
The Abingdon-based division has reported a turnover of £65.2m for 2023, down from the £67.2m it posted for 2022.
The new total is a step back from Smeg’s previously stated target of £80m.
Newly-filed accounts with Companies House also show its pre-tax profit was cut from £1.1m to £897,000 in the year.
Smeg added that its reduced pre-tax profit was as a result of lower than anticipated sales because of the “challenging economic environment”.
However, the brand said: “Whilst the market continues to remain uncertain for some time, Smeg’s iconic brand and style is increasingly desired by a wider body of consumers and we remain expectant of continued sales growth in future years”.
Smeg suffers slowdown in demand
A statement signed off by the board said: “The business experienced a slowdown in demand in the latter part of 2022 as inflationary pressures already present in the market were accelerated by increasing energy costs as a result of the ongoing conflict in Ukraine.
“Whilst these inflationary pressures peaked in Q1 2023 and slowly diminished throughout the remainder of the financial year under review, the cost-of-living crisis, driven by increasing energy, food and interest rate costs, has had a significant negative affect on demand across the whole industry.
“Whilst increasing interest rates have reduced the inflationary pressures in the economy, the consequence has been to stifle demand in those markets that we operate within.”
Smeg added: “The company continues to focus on maintaining customer service and on introducing new products which meet ever changing customer needs.
“Whilst the economic outlook does look uncertain, the directors seek to maximise opportunities in higher margin business whilst maintaining strong fiscal control over day to day operations, as key to improving profitability in 2024.”