Riding the wave of currency volatility

Badgequo Case Study 1000x667

Business: Badgequo

Location: Keighley, West Yorkshire

Sector: Retail

Funding line: £5 million

Turnover: £12 million

For many in the business community, the UK’s EU referendum vote presented a number of possible challenges, emphasising the need to prepare for every eventuality.  For example, how to protect against potential currency volatility in the event of a Brexit vote.

For Badgequo, a UK cosmetics business built on its own brands such as Technic and Body Collection, avoiding any negative currency hit was key to protecting the business.  Founded in 1984 and bought by its current owner, Kai Arter, in 2006, Badgequo manufactures cosmetic products in China and imports them into the UK to be sold across Europe.

Kai Arter, Managing Director of Badgequo explains: “The lead up to the vote raised a number of warning signs of potential market volatility to come. It was important for us to prepare the business for all potential outcomes of the vote and how they could impact us.

“It is for this reason that we looked to build in a number of contingency plans for the business ahead of the vote. Rather than let our business be at the mercy of the markets, we decided to be proactive in our approach and create our own certainty.”

It was at this point, ahead of the EU referendum that Kai and his team worked with Bibby Financial Services (BFS), who have provided funding for the business since 2012. Using its Trade Finance funding, BFS was able to work with Badgequo to book in forward contracts for the remainder of 2016, limiting the businesses exposure to currency markets.

Phil Tobin, Managing Director and Head of Trade Finance at Bibby Financial Services continued: “Badgequo were looking to protect their imports and exports ahead of the vote, ensuring that any impact on the business would be kept to a minimum. We worked with the business to put in place a trade finance facility that allowed forward contracts with its suppliers from Asia to be booked in for the remainder of 2016. This helped the business secure a known exchange rate on the US dollar and provided certainty for the business as the pound fell.  

“We then also helped to support the business with its exports. With a large amount of the business’ sales coming from Europe, Badgequo were also looking to book in forward contracts with its customers.”

Looking forward, the business is well placed to operate in a post-Brexit environment as Mr Arter explains“In recent years we have continued to grow our business and exporting overseas has been a big part of this. We already have teams working in our key European markets and have an office in Germany which may be important as a route to market depending on the terms under which the UK leaves the EU.

“As a business, we are still looking to grow internationally and don’t see the vote to leave the EU as something to prevent this from happening. The U.S. is on our radar as one of the next markets to develop.

“At the moment we have a turnover of over £12 million but we have aspirations to hit our target of year-on-year growth of 35% in 2016 and are on track to do that.”