Corporate strategy

Smiffys to Quit Gainsborough and the UK Because of Brexit

 

Smiffys to quit the UK

Fancy dress specialists Smiffy’s - established in 1894 - are to quit the UK following the country’s decision to leave the European Union in June.

  • M.P. Edward Leigh slammed for not helping his constituencies biggest employer
  • Company trying to stay ahead of the curve with Brexit and we are opening a Dutch headquarters

The British Pound may have stabilised its fall of late but this comes as scant relief to fancy dress supplier Smiffys.

They buy the majority of their stock almost exclusively from China, and it is paying in dollars that is costing the firm so much money that it is now looking to relocate their headquarters to the Netherlands.

Indeed, since July they have been hit by a 30% price hike that simply cannot be sustained.

Their headquarters will be making the move from Gainsborough to Holland, taking one of Lincolnshire’s biggest companies with it.

Smiffy’s distribute 5000 fancy dress products to 5000 stockists around the world with bases in Australia, Dallas and Leeds.

Director Elliott Peckett has slammed the government and his local MP for Gainsborough Edward Leigh, for not doing enough to alay the company's uncertainties over Brexit.

“With the government putting immigration controls ahead of access to the European single market, Smiffys have no choice but to take this action to ensure we are not restricted by any costly trade barriers into Europe once we leave the EU, which accounts for nearly 40% of our turnover,” says Peckett.

The firm was founded in 1894 and remains proud of its family-owned heritage, and currently employs 250 people.

It is hoping to avoid redundancies.

Peckett says, “We are trying to stay ahead of the curve with Brexit and we are opening a Dutch headquarters so we can base our company within the EU. It will mean we will start to invoice our customers in Europe, from an EU country and will start to pay tax to Europe, where the UK will miss out. But we don’t want our our customers in Europe, the majority of our customers, to suffer increased prices due to trade barriers.”

Speaking about the move, Peckett believes he has no other choice because of the markets reaction to the referendum decision.

He says, “The two are inextricably linked – if the global markets perceived Brexit as a positive move for the UK economy and our business, then the pound would be performing strongly against the US Dollar and other world currencies.”

The Pound has hit its lowest levels against the Dollar since 1985 this year.

Peckett argues there are opportunities for the company should it move to the continent:

“Having invested heavily for many years to build the world’s leading international fancy dress brand, Smiffys now receives payment in other currencies that we can use to manufacture our costumes, wigs and accessories. This gives Smiffys a fantastic competitive advantage against some of our UK and European competitors and allows us to minimise the price impact on our valued global customers.”

The company prides itself on its attitude and values towards its staff, but with a hard-Brexit on the cards, Peckett is worried that Smiffys will not be able to protect its foreign workers. Moving to Europe is just one way the company can protect them.

“If the government fails to negotiate their continued residence in the UK, we will work tirelessly to relocate them within our global business. This can only be made possible with more worldwide ‘pack’ points. By opening a Netherlands company and European distribution centre, we are ensuring that Smiffys are in a position to continue expanding trade with Europe from within the single market,” says Peckett.

The company recorded an annual turnover in excess of £56 million and boasts profits of £1,886,015.

MP Edward Leigh Slammed for not Helping his Constituencies Biggest Employer

The company currently supplies 42 countries around the globe, 15 of which are in the EU, with more than 26 million items shipped every year.

With exports accounting for more than 40% of the business, it makes financial sense for the company to relocate some of their offices to the Netherlands.

Although they will keep the Leeds distribution centre where it is.  

Peckett believes it was the lack of guidance from both local and national government that made him reach the decision after hearing little from his local MP, Edward Leigh.

"We must be his biggest employer if not in the top three in his constituency," says Peckett. "He's got a lot to answer for and he is yet to sit down with us to explain his reasons for Brexit and how he is going to help our business."

Mr Leigh’s office has since commented that the MP believes business have the potential to thrive out of the EU, away from the red tape of Brussells.

But for Peckett, the only way for his company to thrive is to leave these shores and continue on in the single market.

He says, “Whilst UK industry has received no guidance nor communication from the government on what trade with Europe will look like post-Brexit, other than the meaningless slogan ‘Brexit means Brexit’, Smiffys are acting to protect our business and the jobs of our valued employees. By opening a Netherlands company and European distribution centre, we are ensuring that Smiffys are in a position to continue expanding trade with Europe from within the single market.”

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