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Retailers forecast a strong year for profits

Despite economic gloom, most retailers expect profits to outstrip 2011, according to a Drapers report.

Heating up: the unseasonably warm weather has got spring sales off to a flier for retailers

Heating up: the unseasonably warm weather has got spring sales off to a flier for retailers

More than eight out of 10 fashion retailers (82.1%) expect profit for 2012 to match or exceed 2011 despite the economic downturn, according to an exclusive Drapers report.

Our first Drapers Market Report surveyed 329 retailers and found that, despite many feeling there is a lack of Government support, most are optimistic about trading this year.

The results also suggest that last year’s trading was not as poor as many had feared, with 76.6% of retailers reporting 2011 profit was level or up on 2010.

Trading so far this spring has been bolstered by getting new stock onto the shop floor early and fine weather.

Simon Poole, managing director of men’s young fashion brand Luke, said it had “broken its back” to get [stock] to retailers in January and early February.

He said: “In a tough season you need as long as possible to sell; we’ve already had lots of repeats. We’ve had more repeats in the last four weeks than we did in September and October because people didn’t buy enough.”

Janine O’Keefe, owner of contemporary womenswear indie O’Keefe in Esher, Surrey, said: “The last week has been fantastic. In fact, trade has been good since the beginning of the month. I’ve changed the brand mix quite a lot in-store and customers seem to like that and are buying into the key spring trends like colour.”

However, Anthony Thompson, chief executive of lifestyle retailer Fat Face pointed out that trading next month will be benchmarked against a strong performance driven by last Easter’s warm weather.

He said: “I think retailers are going to have their fingers crossed because we are up against some tough like-for-likes.”

Wendy Hallett, founder and managing director of multi-branded concession business Hallett Retail, added: “We are against good weather from last year so we may find the like-for-likes are still tough but in actual terms we’ll see some good lift.”

Despite a mainly optimistic outlook, retailers remain cautious about the coming years, with 28.5% saying they don’t expect to see significant economic recovery in the UK until the end of 2013 at the earliest.

David Cameron’s Government also came in for criticism, with 84.9% saying ministers should do more to help retailers out of the financial downturn. Most believe the Government should support their businesses with tax breaks, rapid action to help the high street and legislation to reform the rental system.

Drapers market report stats

● 76.6% of retailers said profit for 2011 was the same or better than 2010

● 82.1% of retailers expect profit for 2012 to be the same or better than 2011

● 84.9% of retailers think the Government should do more for fashion retail

● Lack of consumer confidence is the biggest concern among fashion retailers

● The menswear category is the most profitable for retailers

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