Clothes shops lose 66 percent of their profit margin

19th May 2015, Comments 0 comments

The retail clothing sector has seen its profit margin drop by around two-thirds over the latter years of the financial crisis, the central statistics agency CBS said.

In 2010, operating profit was EUR 500m, but by 2013 this had dropped to EUR 150m, the CBS says. The fall in profit in the retail trade in general in the same period was 16 percent, but for clothes shops it fell 70 percent.

The main reasons for the sharp downturn are operating costs such as rent and staff, according to the CBS. Around half the operating costs are spent on stock. Of the rest, staff wages account for one-fifth and rent for around 12.5 percent. Between 2010 and 2013, rents rose by nearly seven percent and staff wages by 1.5 percent despite the high number of redundancies. The CBS says the increase in wages can be found in higher social premiums.

Cost-cutting

Turnover in the period fell by EUR 700m while costs fell EUR 300m. Cost-cutting in stock, communication, energy use and advertising was not enough to cover the shortfall, the CBS says. ‘It is almost impossible to earn a living in the clothing sector,’ broadcaster Nos economy editor André Meinema said. ‘Stock remained on the hanger or was sold at a huge discount, so retailers earned little or nothing.’ Several clothing retailers, such as Miss Etam, Promiss and Henk ten Hoor, have gone bankrupt or have been relaunched with new investment over the past year.


© DutchNews.nl

 

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