👉 Background: The Cotton On founder started selling denim jackets from the back of his car 34 years ago. That little market business turned into Cotton On - which now has over 1,500 stores globally and over 18,000 staff.

👉 What happened: And it ain’t just Cotton On anymore. The group includes stationery brand Typo, youth fashion biz Factorie, footwear brand Rubi and the classic Supre. Despite all the concerns about the declining retail sector, Cotton On saw its net profit double to over $126m.

👉 What else:This makes Cotton On one of the most profitable Australian retailers everrrrr. And with an increasing net profit margin, Cotton On is looking like a VERY tasty prospect for the public markets.

What's the key learning?

💡A net profit margin measures how many cents of profit a company keeps for every dollar it spends.

💡While Cotton On’s net profit of $126m shows how much the company made, the net profit margin shows how efficient the business is at turning its revenue into profit.

• In 2021, Cotton On’s net profit margin was around 4.6%
• In 2022, Cotton On’s net profit margin was around 5.93%

💡Increasing the net profit margin may be thanks to:

• increased price of goods or services,
• reduced cost of raw materials
• reduced rent and salary costs.

No matter how Cotton On achieved this, it is doing a LOT right in an industry that’s facing some major headwinds.