CASHMERE producer Johnstons of Elgin has provided a boost for the textiles industry in Scotland by growing underlying profits by more than 50 per cent helped by its success in overseas markets and London.
The company achieved £6.5 million operating profit in 2016 up 55 per cent on the £4.2m recorded in the preceding year.
The growth was powered by a 21 per cent increase in international sales with what chief executive Simon Cotton described as particularly strong performances in France and Japan.
Johnstons-branded goods sold well in Japan. The privately-owned company makes clothes that firms sell under their own labels in France.
Mr Cotton said the flagship London store the company opened on New Bond Street in 2015 had performed very well in its first full year, giving the firm great confidence in the attractiveness of its retail proposition.
He added: “2017 looks encouraging despite cost pressures from the weaker pound. International sales are again looking positive and our retail business continues to grow.”
The fall in the value of the pound may have helped boost sales in overseas markets.
Growth in sales helped the company play an increasingly important part in the economies of the Scottish Highlands and the Borders.
Johnstons has mills in Elgin and Hawick. It employed an average of 989 people in 2016, up from 943 in the preceding year.
Mr Cotton said both mills provided high service levels.
The success will increase confidence in the ability of Scottish manufacturers to compete on the global stage amid intense competition from countries where costs may be lower.
The 220 year old Johnstons is one of the survivors of the heyday of Scottish textile manufacturing. Many mills have closed.
The company reckons it is the only manufacturer in Scotland to maintain the capability to take natural fibres from their raw state, through every stage of the process, to finished products.
It says this allows it to control quality and retain the value added at each step.
On its website Johnstons notes it wants to conserve the increasingly rare skills involved in textile production.
It says: “Our Training Centre in Hawick offers apprenticeships to people of all ages and is central to our vision of supporting and developing our legacy.”
Recent investment in growing the retail business appears to have paid off.
In the 2016 accounts, newly filed at Companies House, Johnstons says growth in higher margin retailing helped the company achieve a 29.9 per cent gross profit on sales last year, against 25.3 per cent in 2015.
Johnstons has outlets at both mills and a shop in St Andrews. It launched a small retail operation on Nantucket Island in the USA in 2015.
In the strategic report in the accounts, dated 22 March, it states: “Stock levels in some of our larger customers are slightly higher than normal at the end of 2016 and some fashion styles are coming to the end of their lifecycle so we expect turnover and profitability to be lower in 2017.”
Pre tax profit fell to £6.2m from £7.8m. The company booked a $£4.1m profit on a property sale in 2015.
Total sales increased 3.3 per cent annually in 2016, to £68.8m, from £66.7m.
Overseas sales rose to £21.7m from £18m. UK sales fell to £47.1m from £48.7m.
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