Pre-tax profits at ethical fashion label People Tree sank 45.5% to £152,785 in the 12 months to December 31, 2014, after wholesale and online sales slowed.
Total sales fell 9% to £2.7m during the year, with turnover from wholesale dropping 14% and ecommerce and mail order sales down 2%. However, UK gross margin increased from 63.2% to 65.1%.
In accounts published on Companies House, the ethical fashion brand said it was “scaling back high-interest social borrowing and closely managing operating expenditure to maintain profitability and build a social base for financially sustainable growth”.
Speaking to Drapers, People Tree’s co-founder and chief executive Safia Minney said she was optimistic that the London-based brand could hit sales of £6m in 2017 on the back of expansion overseas.
“We had a very strong autumn 15 and strong orders for spring 16, which will impact this commercial year. We’ve been growing quite dramatically in Germany, Benelux and Scandinavia and Slovakia and we have expansion plans for the US, New Zealand, Australia and Canada.”
She said its collaborations in 2010-11 with Harry Potter actress Emma Watson boosted awareness of the brand in the US, where it hopes to strike new wholesale partnerships.
The brand will relaunch its website by the end of the month and plans to unveil a bespoke German language site in the autumn.
Minney said the documentary True Cost, which explored the human and environmental impact of the fast fashion industry, had also cast a spotlight on the brand and on the ethical fashion sector, helping to drive traffic to its website.
She added that young consumers are increasingly demanding transparency when it comes to how their clothes are made.
The brand has about 200 wholesale partners in the UK including Asos.com, House of Fraser and John Lewis.