Hailed as a denim legend by his peers, Babar Ahmed’s unrivalled product knowledge has kept profits rolling in at supplier Duty Free Clothing, despite the collapse of some of its high street customers
Being able to see into the future is a pretty handy skill to have, particularly in a recession, and one that Babar Ahmed claims to possess. The chief executive of denim supply giant Duty Free Clothing is a palm reader and has forecast a sales uplift of 30% next year.
“Palm reading is something I’ve trained for in case I need to leave the fashion industry, but it’s only about 40% to 50% accurate,” Ahmed jokes, believing instead that his success is down to his passion for denim. “I just like jeans and seeing them on people,” he says.
But his apparent modesty hides an in-depth product knowledge that led the sales director of one denim brand to hail Ahmed as a “denim legend”. Another denim customer called him an “exemplary supplier”, adding that Ahmed’s “product knowledge and attention to detail is excellent. He can execute a brief very well.”
In five years the business has racked up annual sales of £100 million, owns three factories in China, employs in excess of 5,000 staff and counts the likes of high street retailers River Island, Jane Norman, Miss Selfridge and Republic, and brands such as Lipsy and Chilli Pepper among its customers.
“The reason we’re successful is because we understand our customers. We look at their demands and then do specific ranges for them rather than try to sell a generic range. We don’t try to push the same trends to all our customers,” Ahmed explains. “The absolute, most important thing is to learn and appreciate your fabrics and the different washes that can be achieved. Buyers sometimes struggle to understand why we can’t deliver a certain wash on a certain fabric.”
For spring 10, Ahmed is backing pale, light washes and distressed denim, and lists Diesel, Replay and G-Star as the brands to watch. “They are very good on washes and smaller labels should take inspiration from these brands,” he says. “I don’t think we’ll see many new labels being successful in the current climate. They need to see out this recession first.”
Despite Duty Free Clothing’s healthy sales, Ahmed admits business is feeling the pinch of the recession. “Well, [it doesn’t help] with all these companies going bust,” he sighs, probably referring to young fashion chain Bay Trading, one of his customers, which collapsed the day Drapers met Ahmed, before being bought by supplier Rinku Group. “[The collapses] have a big knock-on effect on the production process. Your factories are waiting for work which is no longer there. From a financial point of view, money has gone out of your business and you don’t know if you’ll get it back,” he explains.
Credit insurance shortfall
Ahmed agrees with the majority in the fashion industry that the government’s credit insurance scheme did not go far enough to support businesses. The scheme sees the government match the cover that insurers are willing to provide, but does not provide any cover where it has been withdrawn completely.
“What you find is that the people you can insure against are the ones who aren’t going to go bust,” Ahmed laughs. “They are just hollow words [from the government]. Clothing is one of most important products in the UK and no one’s ever done anything about it. [The government] doesn’t believe in the clothing sector and hasn’t done anything for it in the past 15 to 20 years. I would like VAT to be reduced, for example. You work hard, produce a collection for a high street store and then it goes bust, but you have no one to go to. You still need to pay your manufacturers - you’re in the middle and have no one to chase. Many smaller suppliers go bust when one major customer goes under.”
But Ahmed hasn’t put all his eggs in one basket. Not only does the company have 400-plus customers, it also designs and manufactures its own menswear label called Damaged Jeans, which launched for autumn 09. Duty Free Clothing will also unveil women’s streetwear brand Rock and Soul for next autumn. Damaged Jeans makes up about 10% to 15% of the business’s total sales, but Ahmed expects this to rise to 25% in the next three to five years - a tactic that should bring higher margins.
“I saw a gap in the market for a customer that was looking for jeans somewhere between a River Island and Diesel price point,” says Ahmed. “Because Damaged Jeans has been so successful, we’ve expanded into knitwear and jersey for spring 09 and have up to 300 stockists. I’m also looking to expand into Europe. I see a lot of potential in Damaged Jeans.”
Rock and Soul will be launched as a collection of denim and knitwear and as a women’s counterpart to Damaged Jeans, with retail prices from £45 to £60. So confident is Ahmed of its success that he is planning to launch the collection into 200 stores in its first season.
Even retail is not beyond Ahmed’s vision. Downstairs in his new £7m head office in Manchester - boasting a gym, sauna and roof garden - is the business’s showroom, which has been designed as a future concession model for the brands. “But that’s a five to six-year plan,” says Ahmed. “We’re looking to take the brands to stores such as House of Fraser and Selfridges, for example.”
Other plans include partnerships with fledgling designers, and Ahmed points to TV series Dragons’ Den as an example. Last year, dragon Peter Jones invested £75,000 in womenswear brand Neurotica for a 35% share of the business, owned by designer Victoria McGrane.
“I’m looking to do a similar thing, where we give designers access to our factories and contacts and give them a work station in our offices in exchange for a share in the business. It’s a great way to find a new, talented designer. Victoria’s motivation was incredible,” says Ahmed. “But also, we all have a social responsibility to help students and young designers. We have a moral responsibility to give something back to the industry.”
2009 Moves into £7m head office in Manchester
2008 Launches Damaged Jeans 2006 Opens first major high street account with Jane Norman
2005 Adds knitwear and jersey to the denim business
2004 Sets up Duty Free Clothing
1987 Grows market business to five sites around the country
1983 Sets up a market stall in Bolton, Lancashire
Who in fashion do you most admire?
There are too many to name but [G-Star founder] Jos van Tilburg and Adriano Goldschmied [founder of AG Adriano Goldschmied jeans] really know their product and are truly inspirational.
What retailers do you most admire?
I really admire Jane Norman as I believe it has the most loyal customer base, a fantastic buying team and the company as a whole is great to work with. But the best retailer for the past four or five years has to be River Island, as it has such a good focus on product.
What designers do you most admire?
Karl Lagerfeld is a great and inspiring designer and I really like his hands-on approach. I also like Vivienne Westwood, who is totally mad but in a good way.
Do you wear any other jeans apart from your own?
I love Replay jeans because the fabric and fit is great, and it constantly works with new washes.
What is the best-selling product you have worked on?
There was one jean style called FD9007, which sold more than 500,000 pairs and the whole high street copied it. That style was the one that really made the company.
What has been the proudest moment of your career to date?
There are two. The first time I saw someone wearing one of my designs on the high street, and moving into my new head office which I helped design and build.
What would be your dream job (apart from your current position)?
A Formula One driver for Ferrari.