Additional discounts make Scotch & Soda profits disappear

Dutch fashion brand Scotch & Soda has suffered a net loss of 12.9 million euros in its latest financial year. The new CEO, Frederick Lukoff, wants to grow the brand abroad by highlighting values such as freedom and tolerance.

Own stores

Scotch & Soda has had a difficult financial year, during which turnover fell by 3 % to 328.7 million euros. The poor weather forced the brand to sell items at higher discounts, which in turn had an impact on the margins: the gross operating profit (EBITDA) decreased by 28 % to 37.3 million euros. The company also suffered a net loss of 12.9 million euros, compared to a modest profit of 0.9 million euros in the previous financial year.

In recent years, Scotch & Soda’s own stores have become increasingly important: last year, through the opening of new stores and the buy-out of franchisees, the brand added 48 stores to its own portfolio. Among others, the 24 stores in Belgium and Luxembourg are now owned by the chain itself. For the first time, Scotch & Soda achieved more than half of its revenue from retail: previously, the company had sold its clothes mainly through department stores and other retailers. “Scotch & Soda has paid a lot of attention to our own stores, but not enough to wholesalers”, explains Lukoff to Dutch newspaper Het Financieele Dagblad. “They still remain important though: it is a way for people to get to know our brand.”

Lukoff, who has only been the new CEO of the fashion company for a month now, is not particularly worried about the lower figures and thinks that the brand can grow strongly abroad, by promoting what he calls “Amsterdam’s values”, such as freedom and individuality. “Fashion brands are successful if they match the spirit of the times. […] Gay rights and the legalisation of cannabis are huge issues worldwide. This city is way ahead of its time. These values can be exported, especially in a world where they are under attack.”