Growth slows at ESW as it shifts to long-term strategy

Irish digital retail giant ESW has reported a drop in profits at its main Irish entity and said a Covid-era surge in online commerce that turbocharged growth has now normalised.

The business formerly known as eShopworld was founded by Irish entrepreneur Tommy Kelly and works with brands and retailers across the world, such as Nike and Calvin Klein, to help them localise their websites in about 200 markets.

The technology helps brands handle everything from online ordering and buying to dealing with taxes and tariffs, delivery, returns, fraud protection and data security.

Financial accounts just filed for US Direct E-commerce Limited record a rise in gross profit from €100.7m in 2022 to €111.6m last year.

Turnover dipped to €1.18bn from €1.29bn, which the accounts say reflect a planned exit from lower margin businesses.

Profit before tax in the period was €19.17m, versus €20.67m in 2022. Profit after taxation was €15.3m in 2023.

The accounts don’t give a complete picture of ESW Group’s finances because they exclude some business including in the Americas and Singapore, but the unit historically accounted for something under 80pc of overall group revenues.

ESW has tended to focus on the fashion sector, but it is expanding its client base, including into electronics, according to a note in the accounts.

“As the business has matured and grown in scale, the relative pace of growth from existing, established, early adopter brands has eased and ESW’s growth focus is now evolving to place much greater emphasis on new business from emerging enterprise-scale brands, and indeed to new product lines, including electronics,” it said.

That transition involves a five-year investment programme and will result in more moderate growth in the near term, while driving stronger, more sustainable new business growth, it said.

The Irish accounts show costs rose last year on the back of investment in people and technology, which pushed administration expenses up €18m to €119.5m.

A spokesman for ESW said the decline in profit in 2023 versus 2022 mainly reflected that investment.

“Following this investment we have onboarded a record number of new clients in 2024 as we continue to extend our cross-border offering to leading global brands across beauty and lifestyle, apparel, entertainment, gaming and electronics. Global brands view our platform as a critical and accelerator route to new opportunities enabled by working with a market-leading partner.”

Last year, Mr Kelly stepped back from his chief executive role to become co-chairman of the business, two years after finalising a sale of his stake.

He became co-chairman alongside Marc Pontet, CEO of Asendia, ESW’s owner.

Eric Eichmann took over as chief executive. Since then, Sarah Keating was appointed chief people officer and Mark O’Neill was appointed CFO.

Reporting on:independent.ie