THE House of Bruar has underlined its concern that the challenging economic conditions will impact the sale of luxury goods, as the latest accounts for the upmarket shopping destination showed it lifted profits by four per cent to £3.8 million.
Perthshire-based House of Bruar, located just off the A9 near Blair Atholl, notes in accounts newly filed at Companies House that sterling’s weakness has ramped up its costs “significantly”.
The value of the pound versus the dollar and the euro has plunged since the vote was taken to leave the European Union in June 2016, pushing up the cost of goods imported from Europe and the US to the UK.
However, The House of Bruar, a popular stop-off for tourists and motorists travelling between Perth and Inverness, declared it was “well placed to withstand any market downturn”. It has increased turnover and maintained gross margins over its last three financial years.
The accounts show that turnover at The House of Bruar rose to £26.7m from £24.4m, amid an increase in visitor numbers and the expansion of its online and mail order sales.
The company, whose range runs from Scottish tweed and cashmere jumpers to locally-sourced produce, again took the opportunity to highlight its concern over the impact of major works to dual the A9 carriageway between Perth and Inverness.
While it expects the improvements to increase visitor numbers to the area “enormously” by the time the project is completed, the directors are taking steps to offset an anticipated fall in visitors while the work takes place by continuing to expand is growing direct sales operation.
Scottish minsters have said they expect the work on the section of the A9 between Perth and Inverness to be completed by 2025, with design work for the 22 kilometres stretch affecting Bruar, from Killiecrankie to Glen Garry, currently ongoing.
Patrick Birkbeck, managing director of House of Bruar, said that while the work will be a “nuisance”, he believes the improvements will be “fantastic for the very north of Scotland” and bring more visitors to the area.
Mr Birkbeck, whose company has been holding talks with Transport Scotland over the plans, added: “Ultimately, it will be a much safer road than it is at the moment - that is a huge justification for doing it.”
Mr Birkbeck writes in the accounts that the company is seeing the benefit of its investment in infrastructure to support direct sales, with the fulfilment operation shifting from its main premises to a site 12 miles away at Ballinluig. It constructed additional buildings to boost the operation at Ballinluig, with a third warehouse completed at the site since year end.
Mr Birkbeck said the shift into the “digital era” was a “challenge”, but noted around one-third of Bruar’s sales are now made online and through mail order. He expects the split to be 50-50 by 2020. “It is going in the right direction,” he said.
While the company focuses more of its attention to direct selling, Mr Birkbeck observed it was having to accommodate expectations of lower prices among consumers who are increasingly buying online.
At the same time, the cost of imported goods have spiralled because of sterling’s “very painful” collapse since the Brexit vote, which he said has resulted in only a limited rise in foreign visitors.
Asked how the prevailing economic conditions are affecting the sale of luxury goods, he said: “We are always very concerned about it. There is a big push from customers to drive down prices.
“If the customer is driving the prices down, we have to try and drive down manufacturing prices, and we simply cannot do that. Costs have gone up dramatically in the UK.”
The main developments which took place on the site during the period covered by the accounts include the addition of an extra 2,000 square foot of retail space dedicated to ladieswear, while a fish and chip shop has been added since year end.
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