Fashion business owned by former Spice Girl suffers 20% fall in profits on rising turnover
Mark Sweney – The Guardian
The company that runs David and Victoria Beckham’s business empire paid out £30m to the couple, along with former Spice Girls manager Simon Fuller, despite profits falling by a fifth.
The Beckhams and Fuller each own a third of Beckham Brand Holdings, which in turn owns Victoria Beckham’s fashion business and the David Beckham brand. Accounts from the company show that of the £30m declared in dividends, almost £19m was paid out in 2017, up from £10.2m in 2016.
The company’s pre-tax profits tumbled 20%, from £19.85m to £15.7m, as serious losses continue to mount at Victoria Beckham’s fashion business. Turnover, however, rose 17% from £47.5m to £55.7m.
The Victoria Beckham fashion business “and related brand activities” accounted for £42.5m of the turnover, also up 17% year-on-year. Licensing and commercialisation of the David Beckham brand accounted for £13.2m, up 19% year-on-year.
The company spent £11.7m on wages and salaries for its 179 staff,. Victoria Beckham’s operation employs 176 people, and the David Beckham brand three.
The business of exploiting the David Beckham name continues to be extremely profitable. DB Ventures, which is responsible for licensing and other forms of commercialisation of the David Beckham brand, reported profits of £23.2m last year. This was down slightly on the £24.9m in 2016.
The Beckham empire is being dragged down by the underperformance of Victoria Beckham’s business. Losses widened from £8.5m to £10.3m last year. The balance sheet was propped up by the effective write-off of almost £7m in debts that the business owed to her husband’s firm and the parent company.
Two weeks after that move, Victoria Beckham Limited raised £30m from NEO Investment Partners, which took a 28% stake in the business, to “help it enhance both its digital and physical retail presence”.
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NEO Investment Partners has also backed the British designer Tom Dixon, the French bakery Paul and the Italian leather goods firm Valextra.
“The question is whether there is a sustainable route to profit for the Victoria Beckham business,” said Alex DeGroote, independent media analyst. “How does this business turn a profit? There aren’t many businesses out there that can lose £10m every year. You can see from the accounts that the other parts of the Beckham empire are helping to support Victoria’s business.”