Pureplay fashion retailer, The Iconic has reported its sixth consecutive loss in accounts filed with ASIC this week. However, despite grim figures, the company is confident it will turn a maiden profit in FY18.
In the last seven years, one of the biggest players in Australian online fashion, The Iconic has accumulated $152 million in losses, even after making heavy investments in the multi-billion dollar clothing and accessories market.
Over the 12-months ending in December 2017, The Iconic reportedly lost $9.15 million, which was down from the $10.8 million in losses it charted back in 2016. Although, sales over the last year have been at an all-time high, with the company experiencing a 41 percent increase in revenue, which saw the retailer end the year with $267.8 million in sales, with a 49 percent increase in its overall merchandise value, which sat at a healthy $301.3 million.
Of the $9.15 million that was lost over the course of 2017, $5.4 million of that was inventory write-downs. Losses were also minimised because the business was able to save money on distribution costs, as sales were up, but the cost of distribution grew at a slower pace. According to a report by The Australian Financial Review, this meant that The Iconic was cash flow positive for the first time, and was able to rely less on its European parent, The Global Fashion Group.
In light of these results, Patrick Schmidt, The Iconic’s chief executive, is hopeful the business will make a profit this year. He projects the company will hit the $1 billion mark over the next three years.
“We quadrupled our sales in the last three years,” Schmidt told The Australian Financial Review on Wednesday.
While Schmidt admits growth has been difficult, he is pleased with the company’s ability to meet customer needs, creating brand loyalty in the process.
“We have very loyal and very happy customers. That means a lot of repeat purchases, and we have recommendations from people who shop with us to people who haven’t shopped with us,” he said.
The Iconic attributes its stronger financial outlook to heavy investments from the last few years, including a new automated distribution and fulfilment centre and the development of its online marketplace for third-party sellers.
According to Schmidt, a further $100 million will be invested over the next five years, so the company can continue to improve logistics, hire more staff and increase the automation capabilities of its fulfilment centre.