Johnstons of Elgin posts £305k loss after tough year for luxury market
The result marks a sharp decline from the £4.6 million profit the family-owned company posted in 2023.
Johnstons, a cornerstone of Elgin's economy for over 225 years, saw annual sales fall by 6% to £94.2m, down from £100m the previous year.
The company had flagged the slowdown in September when it announced jobs were being cut at its Elgin mill.
Newly filed accounts show that demand fell more sharply than expected in 2024, forcing Johnstons to restructure parts of its business and absorb increased overheads, including wage inflation.
Despite difficult trading conditions, there were bright spots. Its retail division performed strongly, growing its turnover by 4%.
The growth was fuelled by improved online sales and strong footfall at its flagship stores – including a new location at London's prestigious Burlington Arcade.
Managing director Johanna Wallace said the business entered 2024 expecting further growth, but demand quickly fell away due to global economic uncertainty and changing consumer behaviour.
'It took time to react to the subsequent downturn shift in the market, resulting in inefficiencies in our mills and some restructuring costs,' she wrote in the company's strategic report.
The firm said it expects the luxury market to stabilise over time, but that growth will likely be slower than in recent years.
'We continue to invest in additional capacity to meet future growth demands of our private label clients and the Johnstons of Elgin brand,' added Ms Wallace.
The Elgin-based manufacturer produces high-end cashmere and woollen garments, both under its own Johnstons of Elgin label and for major international luxury brands.
Products are made from start to finish in Scotland, with spinning, weaving, finishing and embroidery all carried out at its Elgin and Hawick sites.
Despite the downturn, chief executive Chris Gaffney said the company remains focused on long-term strategy. This includes investing £4.7m in capital projects, including expanding capacity at both mills and upgrading machinery.
Mr Gaffney also highlighted a £5.4m improvement in the company's cash position, driven by tight control over working capital.
'Following consistent growth averaging 25% per annum in the three years after the pandemic, the volumes that were forecasted for 2024 did not come to fruition due to the well-documented slowdown in the luxury market,' he said.
'Our cost structure is now aligned with our forecast for 2025 and we are budgeting for a return to profit this year.
'We expect the luxury market to return to more normal levels of growth in the coming years and are well positioned to benefit from our vertically integrated, made in Scotland, supply chain.
'Everything we sell is either woven, knitted or made into garments by our talented craftspeople in our own mills.'
Johnstons of Elgin currently employs 1,185 staff across its operations, with most roles based in Elgin.
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