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Exclusive: More than a third of indies grow profits

More than a third of indies have seen profits grow over the last year, and a quarter steady with 2011, despite the tough economy.

In a survey carried out by Drapers 38.5% of indies said 2012 had been more profitable than 2011. There was mixed fortune across the industry however with 30.8% reporting a less profitable year and 26.9% the same.

But below the headline figures, it appears much of that growth has come from cost-cutting rather than a successful year of trading.

Hereford young fashion indie Fit’s managing director Luke Conod said: “It’s been down to looking at every expense cutting it and then cutting it some more. That has combined with reducing our pre-book budget and saving more for in-season buys and then targeting brands and styles that are performing well.”

The economy has been the greatest challenge for retailers over the last year with 46.5% of indies stating it was the biggest issue. Discounting was another big issue for indies with 23.9% seeing it as the biggest issue, closely followed by grappling with digital challenges with 22.5%.

Almost half of all respondents were optimistic about the coming year with 49.5% saying they think their business will grow in 2013.

Conod added: “I feel it will be another tough year on the high street but as a business we are well positioned to weather the storm and to improve our profitability further.”

Online will also be a key focus for indies in the new year with 26% of those surveyed saying they would develop their ecommerce offering in 2013. A further 10.4% said they would launch an ecommerce offer next year.

Readers' comments (2)

  • Thierry BAYLE

    Same/ More profits BUT better or worse cash flow?

    When we work with new clients or talk with retailers, a typical balance sheet/P&L account situation is the one where the retailer shows profits but can't pay the bills!
    Why is that?

    Often, the retailer has not turned the goods into cash quickly enough.

    A good additional question could therefore be:
    How is cash flow?

    HAPPY NEW YEAR with 52 weeks of profitable sales.

    Thierry
    globalfashionmanagement
    More business tips on twitter @retailfashion

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  • Thierry BAYLE

    Some retailers show profits however rent and salaries are not reflected as a true value.
    If they were to reflect the real numbers in the accounts, how would the situation look like?

    This is why we start any relationship with a break even analysis and cash flow projection to get the numbers right and plan a buying budget that make sense for a really profitable business.

    Wish you 365 days of good health and pleasure.

    Thierry

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