Section 172 Statement
Year ending 19th February 2023
This statement summarises how the directors have exercised their duties with regards to the matters set out in Section 172 (a to f) of the Companies Act 2006.
Hobbycraft Group of Companies
This statement covers the Hobbycraft group of companies, which comprises:
|Company Name||Company Number|
|Hobbycraft Group Limited||07216034|
|Stitch 2 Limited||07216740|
|Stitch 3 Limited||07217283|
|Stitch Bidco Limited||07068903|
|Hobbycraft Trading Limited||00806269|
|Hobbycraft Superstores Limited||03289788|
Hobbycraft Group Limited is the Group’s parent company and the only trading company is Hobbycraft Trading Limited.
The Board considers the interests of stakeholders in decision-making and seeks to understand their interests via direct engagement by directors and by reviewing reports and updates from members of management.
The Group’s key stakeholders are outlined below along with details regarding why they are important to the Group and what is important to them:
- Colleagues:: the strength of our business depends upon the knowledge, hard work and dedication of our colleagues, who in turn rely on the business for stable employment and for opportunities to realise their potential.
- Customers: it is essential to our future that we consistently meet the needs of our customers and maintain brand loyalty, supported by our highly successful Club. We aim to continuously provide high quality products at accessible prices and to stay up to date with crafting trends.
- Communities and the environment: serving local communities is at the heart of Hobbycraft’s ethos, whether through catering for local crafting needs or through our charity partnerships, while we seek to minimise any adverse impact upon the environment.
- Suppliers: supplier relationships are fundamental to our success, not least because all our products are manufactured and delivered by suppliers, all our locations are leased sites and many of our essential services are provided by third parties. Furthermore, suppliers often rely on us for income and to create employment in their local areas.
- Regulators: we seek to comply with all applicable laws and regulations and to maintain a cooperative relationship with regulatory bodies. We are proud of our reputation for high standards of business conduct.
- Shareholders: we have a collaborative relationship with our shareholders and welcome the advice and experience that the majority shareholder brings to the Board. We rely on the majority shareholder as our main source of debt funding, and they rely on us to manage their investment in a sustainable way that generates value.
Acting fairly between Company members
Ownership of the Company is divided between “A” and “B” ordinary shares. Each of these shares carries a single right to vote and entitles the holder to attend general meetings and to receive dividends, with no class of shares preferred to the other. As such, all shareholders benefit from the same rights, as set out in the Company’s articles of association and the Companies Act 2006. This structure is reflective of the Board’s key principle of treating all Company members fairly.
Consideration of long-term factors
The Board is mindful of the long-term implications of strategic decisions and carefully assesses those implications. For example, decisions around capital expenditure aim to balance the need to invest in the existing infrastructure with the objectives of growing the business and implementing new and improved systems.
The Group’s success is dependent on the proper selection, pricing and merchandising of arts and craft products. We believe it is important to retain a range that meets the needs of our established customer base, which continues to benefit from our evolving specialist products, while also inspiring a new generation of customers through more accessible pricing and inspiring product selection. This is coupled with the inspiration that is provided by a wide range of demonstrations and workshops that are available online and in-store, as well as our online ‘Ideas Hub’ and social media content.
The Group is also focused on multi-channel growth as we seek to better serve our customers’ needs. The Group employs a robust selection process with regards to the opening of new stores and will continue to open stores in relevant locations across the United Kingdom (including Northern Ireland) to drive profitability and brand awareness. This is coupled with the aim of increasing E-commerce participation as we continue to grow both online sales and profitability through further digital investment, whilst improving our online experience and offering.
The interests of colleagues
The interests of colleagues are always factored into the Board’s decision-making. That principle is helped by the length of service of the CEO and that of several members of the senior management team. There is extensive retail experience among the senior team members who have a strong understanding of and a rapport with the colleague base. The senior team’s knowledge and active engagement enable the Board to maintain a sharp insight into the culture and views of colleagues, which is further informed by the annual engagement survey conducted anonymously. The results of the survey are considered a core KPI.
In addition, Hobbycraft has a number of other effective engagement mechanisms including the fact that colleagues are kept informed of performance and strategy through regular presentations and updates. These updates are delivered via a combination of face-to-face meetings and company newsletters.
Executive directors attend key trading meetings throughout the year as well as regular meetings with colleagues, including listening groups conducted by the CEO. As an example, following the Christmas trading period, executive directors held listening groups across the business to collate feedback on lessons learnt and to make improvements going forwards. These inclusive principles were evidenced by Hobbycraft being awarded fifth place in the Best Companies Survey 2022, along with maintaining our 3-star accreditation.
Board meetings are attended by the People Director to ensure that the Board is kept abreast of employee-related matters, including demographics, diversity and gender equality, engagement activities, the results of surveys, labour turnover rates, learning and development activity, and pay and reward matters. The latter is also discussed in formal remuneration committee meetings.
Our Diversity and Inclusion committee has the following mission statement: making sure all diversities are represented and included within our recruitment, advertising, products and content. The committee is made up of a diverse group of colleagues from across the business, with the outcome of committee meetings reported to directors on a monthly basis.
With regards to health, safety and wellbeing, the Board is updated monthly on safety performance and risk management. Trained mental health first aiders are available to all colleagues, which is complemented by Hobbycraft’s partnership with Retail Trust, a charity that provides practical and emotional support. The Group also operates flexible working arrangements, which all colleagues are invited to apply for.
The Group invests in learning and development of all colleagues; one example is the trainee manager programme to support colleagues in their journey to become store managers. The Group also continues to invest in the Artisan programme (our expert crafting colleagues who embody our love of craft and all things making), which aims to maximise colleagues’ talents.
Relationships with suppliers, customers and others
The Board is briefed on major contract negotiations with key suppliers and a formal policy is in place to govern the contract approval process. A balance is sought between the need to obtain value for money, to maintain or improve quality of service and to foster strong relationships with key suppliers. Any new suppliers are subject to a due diligence review, determining their ability to supply the products or service with acceptable quality, along with their financial stability and their legal and ethical position.
The sentiment of customers is measured via monitoring sales performance figures and shopping behaviours, as well as direct engagement using surveys and listening groups, all of which are closely monitored by the Board on a weekly or monthly basis. The interests of customers are considered in decision-making, such as with respect to the store portfolio, the online shopping experience, product selection, and the monitoring of suppliers to ensure quality and safety standards are met.
Click here for our Sustainability Report, which provides detailed information on our environmental, social and corporate governance (ESG) strategy.
The Board is focused on meeting all regulatory obligations and strives for best practice in that regard, with decision-making informed by regular dialogues with regulatory bodies, such as the Chartered Trading Standards Institute. Hobbycraft manages its tax affairs proactively to comply with tax legislation, engaging with HMRC where required and seeking expert advice from qualified tax professionals. Click here to read our Tax Strategy Statement.
The CFO is responsible for managing the relationships with our lenders, insurance provider and credit rating agencies, and for the Group’s cash and debt management and financing activities. The CFO provides regular reports to the Board on these activities, including plans to ensure appropriate access to debt capital and monitoring headroom on facilities.
Standards of business conduct and impacts on the community and the environment
The Board supports the Group’s strategy with regards to supporting local communities, aiming to reduce adverse impacts on the environment and seeking to maintain the highest standards of business conduct. ESG principles are central to the business and factoring these into business decisions is important for stakeholders, colleagues and the communities in which we operate. As well as complying with regulatory requirements, we actively encourage our teams to make ESG considerations a part of everyday business decision-making.
We are committed to becoming more sustainable as we grow, with a focus on colleague wellbeing, our store communities and the way we use our buying power to drive positive change.
We have made considerable progress towards our sustainability objectives, including improvements in the ways that we inform stakeholders about the strategy itself and progress towards objectives. This is evidenced by our commitment to publish the Sustainability Report on our website (click here).
Going forwards, we remain committed to continue to reduce our impact on the environment, support our colleagues and chosen charities, and ensure that we maintain integrity through ethical sourcing and supplier partnerships.
This statement has been approved and is fully supported by the Board of Directors.
Chief Financial Officer
15th August 2023