THE new chief executive of Arran Aromatics has said the fragrance to candles business is on course to grow sales by around 25 per cent in the current year, putting it on course to return to profitability over the next 15 months with news stores planned for Glasgow and London.
Jacqui Gale said the company is reaping the rewards of the hefty investment it has made in revamping its range and retail offering with sales heading for £6 million in the year to February compared with £4.8m in the previous year.
“We’re in major double digit growth and a lot of that is what we’ve done with Christmas,” said Ms Gale, a beauty trade heavy hitter who was recruited to lead a push for growth at Arran Aromatics in February.
Ms Gale said she is eyeing sites for new stores on Glasgow’s Buchanan Street and in central London as the company looks to capitalise on the appeal of the Arran Aromatics brand. This was developed by Janet and Iain Russell who started making toiletries in their Arran cottage using pure honey and herbs from the island in the 1980s.
Janet Russell remains an ambassador for the firm, which employs up to 50 people on Arran at peak times.
Ms Gale’s faith in the global potential of the Arran Aromatics brand was the main factor behind her decision to accept the offer the Business Growth Fund made her to run the company although she knew it faced challenges.
In 2009 HMRC lodged a petition to wind up the company in respect of £180,000 underpaid payroll taxes.
Turnaround expert Iain Pittman took charge in that year and spent months stabilising the business and enabling it to clear its debts to the taxman. He remains on the board as chairman.
The latest accounts for Arran Aromatics, newly filed at Companies House, show the firm lost £1.3m in the year to 28 February. The business lost £419,000 in the previous accounting period. This covered the seven months from 24 July 2013, when the growth fund invested £2.8m in the company.
However, the bank-supported BGF underlined its confidence in the business by pumping a further £2m into the business in the year to February.
Ms Gale is happy the company has put the building blocks in place for a profitable future.
She said: “I knew that last year was going to finish not very well; that was one of the reasons they brought me in.”
The company has won a great response to the new products it has developed in recent months, such as Nutcracker-themed Christmas boxes.
Ms Gale noted an advent calendar that the company developed to showcase a range of its products for John Lewis has sold out.
This formed part of the first programme Arran Aromatics has completed to target sales in the key Christmas period. Around 50 per cent of sales of products like fragrances are made in the three months leading up to the festive season.
The company has had what Ms Gale described as very good meetings with a range of retailers about launching the new Arran Aromatics offering in their stores.
She said the investment the company has made in its own stores has paid off, highlighting the success of the new outlet the company opened on George Street in central Edinburgh.
“We’re 10 per cent ahead of our budget for places like George Street,” said Ms Gale, who expects to open the Buchanan Street and London stores in coming months. Openings in Aberdeen and Inverness may follow.
Plans for a big expansion in the company’s presence in key overseas markets such as the Middle East are progressing. Ms Gale noted she has seen potential distributors from a range of countries including Germany, France and Switzerland.
“We have gone to legals with quite a few people,” she added.
Noting that Arran Aromatics has also upgraded its manufacturing and IT systems, Ms Gale said the business is operating more efficiently.
Regarding the trading outcome for the current financial year, she said: “We will still lose money but not nearly to the extent that we have done.”
Ms Gale expects the business to move into profit in the year to February 2017.
Arran raised £1.8m loan finance and £260,000 equity from the Business Growth fund in the year to February.
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