The stores of the British brand Paul Smith in Hamburg, Berlin and Munich will be closed due to the recession that is observed in the country's economy, writes WWD.
The German market today is very different from the one British designer Paul Smith entered a decade ago when he opened his first store in Hamburg, a two-story, 5000-square-foot shopping center in a historic Biedermeier building with a garden.
According to the Munich Institute for Economic Research, the German economy contracted by 2023% in 0,3 and will grow by 2024% in 0,7. Germany was the only European Union country to enter a recession last year.
The country is not in a spending mood and a spokesman for Paul Smith confirmed that spending habits have changed. “All of our store leases in Germany were concluded before COVID, when shopping habits were very different from today. The decision to close stores is never an easy one, especially given the dedication and efforts of all of our local staff. We are very proud of the wholesale distribution we have in Germany and continue to work with our valued partners in the market,” the spokesperson added.
The brand has three separate stores, each with its own atmosphere. The 1000-square-foot Paul Smith store in Berlin on Potsdamer Strasse features 45 black metal coat hooks. At the time of its opening, this quarter was at the epicenter of art and design galleries and fashionable concept stores. The Berlin building was built in the 1800s, and Smith retained as many details of the old store as possible, from the floorboards to the doors. The brand's Munich store was the latest to open and has a more modern look with a glass facade, minimalist interior and mid-century modern furniture.
Paul Smith noted that the difficult macroeconomic situation affected its financial results for 2023. The company said its cost of doing business increased in the fiscal year that ended June 30 due to the impact of rising inflation. “Low consumer confidence” and difficulties in the supply chain were also noted. Over the 12-month period, the company's turnover rose 4% to £152,6 million, while operating losses widened from £7,5 million to £11,6 million. The company said that the increase in losses was due to rising inflation costs and increased investment in advertising activities.