The company behind fancy-dress brand MorphCostumes has fallen further into the red after counting the cost of an international sales drive.
Edinburgh-based AFG Media, which sells its products in 29 countries, reported a pre-tax loss of £967,000 for the 18 months to 30 November, compared with a £163,000 loss for the 12 months ending 31 May 2014.
Operating losses – which strip out interest payments, finance costs and amortisation of goodwill – stood at £131,000, against an operating profit of £219,000 previously.
Co-founder and marketing director Gregor Lawson said the losses came after the firm invested in new costumes – including Marvel’s Deadpool and Star Wars Stormtroopers – and expanded its headcount.
“This period saw us launch further market-leading costumes, expand into new territories and launch a broader range of non-spandex costumes globally,” said Lawson, who founded the business in 2009 alongside brothers Ali and Fraser Smeaton.
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“The cost of launching additional costumes, alongside investment in people and infrastructure were made in support of our transition into a global costume business. While this investment has resulted in a loss for the period, we believe we have now built the required scale necessary to capitalise on the opportunities available in the wider non-spandex costume market across a number of channels.”
Lawson’s comments came as AFG said turnover for the 18-month period came in at £15.2m, against £10.1m in the year to May 2014.
The firm received a £4.2m investment from the Business Growth Fund (BGF) in 2012 to help expand its range of costumes and grow overseas sales. BGF investor Ben Barker, who sits on the AFG Media board, said the global retail party goods market is worth an estimated $10 billion (£7.5bn) a year.
“By continuing to invest in the MorphCostumes brand and products, the team at AFG Media are demonstrating that they are as ambitious as ever and they are building a company that is well positioned to grow its slice of this exciting sector,” he said.