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QS targets a profit for first time in 10 years

Value retailer QS is on track to make a profit this year, after a decade spent languishing in the red.

QS, which was bought by Indian manufacturing and retail giant Alok Industries in 2007, told Drapers it was on course for profitability to improve by between £15m and £20m in the year to the end of March 2010.

If its performance comes in at the top end of expectations then the retailer will turn a profit for the first time in 10 years, after notching up an £18m loss in the previous year.

Profits have already improved by £12.8m in the nine months to the end of December.

QS chief executive Anupam Jhunjhunwala said the retailer, which is in the process of rebranding its stores to Store Twenty One, is set to increase total sales by between 8% and 10% in the current year to between £120m and £150m.

Jhunjhunwala has made cost savings of £10m during the year, through slimming down senior management, shaving money from its marketing budget, restructuring QS’s supply chain, and seeing an improvement in margins because of increased direct sourcing in Southeast Asia and the Far East.

QS sources 60% of its product direct, with the remaining 40%, which is fashion-forward product requiring shorter lead times, sourced from UK importers.

Jhunjhunwala said footwear was a star performer for the retailer in the current year. He added that menswear would be ramped up this spring.

QS will open 60 stores in its next financial year, after adding 40 new stores in this financial year. It has 240 stores. The retailer has fitted out 50 stores as Store Twenty One and will have another 40 refurbished by mid-April.

Its remaining 150 stores will be rebranded by 2011. Like-for-likes have risen 20% at rebranded stores, according to the retailer.

Jhunjhunwala forecast that sales in the year to March 2011 would grow by 25%, half of which would be generated by total sales growth and the other half by like-for-like growth.

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