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Net-a-Porter profit hike bucks designer gloom

Luxury etailer Net-a-Porter recorded a 56% hike in pre-tax profits to £7.1m for the 26 weeks to August 1, providing a shot in the arm for the depressed designer sector.

A statement to shareholders from Net-a-Porter founder and chairman Natalie Massenet, which was leaked to Drapers this week, showed that the designer etailer had continued to buck the doom and gloom to record a 40% uplift in sales to £53.2m over the six-month period.

The stellar profit performance puts Net-a-Porter just £3m off its full-year profit target for the year to January 31, with Christmas still to come. Massenet said in the statement:

“Trading in the second half of the year has continued to show strong growth on last year and we look forward to a successful year.”

The strong performance is in stark contrast to that of some of its bricks and mortar rivals, which have suffered from slowing consumer demand, high overheads and inflexible suppliers. Mini-chain Flannels is awaiting a supplier vote on its proposed company voluntary arrangement (see box, below) while Scottish-based Cruise has also suffered a prolonged period of difficult trading after its pre-pack administration earlier this year.

Net-a-Porter, which stocks designer brands ranging from Balen ciaga, Proenza Schouler and Lanvin through to Burberry, Stella McCartney and premium denim brands such as J Brand and Earnest Sewn, said it had boosted its cash reserves, and had £15.6m in the bank as at August 1, compared with £5m for the comparable period last year.

It said that it would pay its shareholders a £3-a-share dividend, totalling £1.64m, as a result.

Net-a-Porter has continued to thrive because of its innovative approach to etailing. During the period it launched a spin-off stock clearance site TheOutnet.com. Massenet

said that trading on the site since its launch in April had been “encouraging”.

It was also among the first etailers to launch an iPhone application in July and it has continued to open up its site to new international markets. Rumours persist that there are plans to launch a menswear concept but these have been denied.

Earlier this month Massenet, who owns about 17% of the etailer with her husband, was reported to have ruled out a flotation. At the time she said: “We don’t need to raise money; we run off our own steam. Our shareholders are very happy. They are there for the long run.”

Luxury goods group Richemont has a 28% stake in Net-a-Porter.

Update: Flannels CVA

The future of Flannels remains uncertain as its suppliers finalise which way they will vote on its proposed company voluntary arrangement (CVA) ahead of a meeting on Monday.

A raft of premium brands told Drapers that they will support the 15-store designer minichain’s CVA. However, it is understood that the larger fashion houses including Gucci, Prada and Dolce & Gabbana will have a stronger sway on the vote because they are bigger creditors. Flannels needs a 75% approval rate by value of its debuts.

Other suppliers to Manchesterbased Flannels, including Evisu, CP Company, Malene Birger, Stone Island, William Hunt and Patrizia Pepe, said they would accept the proposed terms. Under the terms from Deloitte, which is acting for Flannels, suppliers

would get 70p in the pound and unsecured creditors 60p.

Gucci, Prada and Dolce & Gabbana were unavailable for comment.

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