Victoria Beckham’s fashion and beauty business remained lossmaking in 2020, as the former pop star, her husband David and other shareholders pumped in millions of pounds to keep it afloat during the pandemic.
Sales fell 6% compared with a year earlier to £36m, according to accounts filed for Victoria Beckham Holdings (VBH), which owns the former Spice Girls member’s fashion business, as well as the majority stake in her beauty range, which launched in 2019.
However, the company’s £6.8m pre-tax loss was less than half the £15.6m loss for 2019, which the company attributed to better management of its supply chain, and a new business model whereby the brand sold more of its goods directly to consumers.
Sales of its high-end clothing slumped when UK Covid restrictions closed stores for several months of 2020, combined with a sharp fall in the number of international visitors to Britain. As a result, Beckham announced in July 2020 she was cutting about a fifth of staff at her fashion label, and was slashing by one-third the number of garments produced for each collection.
Beckham faced criticism in 2020 for using public funds to furlough 30 staff at the start of the first Covid lockdown, despite her estimated net worth of £335m, a decision that was later reversed.
VBH employed an average of 130 people during 2020, with annual staff costs reaching £9.3m. The highest-paid director earned £120,000 during the year after taking an 80% cut to their salary compared with a year earlier.
During the 12 months to 31 December 2020, the company’s shareholders – which include the Beckhams and the private equity firm Neo Investment Partners – were required to provide £9.2m in loans to keep the business going during the early months of the pandemic, as well as repaying a bank loan from HSBC. Shareholders provided a further £600,000 in 2021.
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VBH forecast it would continue to rely on shareholders for financial support, amid continued economic uncertainty and a change in strategy, leading the firm’s auditors to express uncertainty over its ability to continue as a going concern. However, the group’s directors said they expected the Beckhams and other shareholders to carry on funding the company.
The group reported the Victoria Beckham Beauty brand performed well during its first full year of trading, reaching £7.3m of sales in 2020 of its skincare and makeup range, including Posh Lipstick, which nods to Beckham’s nickname in the Spice Girls.
During the past six months, Beckham’s fashion label has cut the price of its dresses by as much as 40%, using fewer embellished fabrics and simpler designs, in an attempt to widen its appeal.
