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Claret Showroom is a fashion distributor representing Australian and American brands to retailers in the UK and Middle East including the likes of ASOS, Urban Outfitters, Net A Porter and Selfridges. They run quarterly sales campaigns in the London and Paris showrooms inviting retail buyers to see new styles and pre-order for the upcoming season.

Started 9 years ago, the company made the switch from sales agent to distributor. The company has been working with some great brands and has been growing quickly off the back of that. The company has been growing fast over the last four years and that growth was putting a strain on cashflow. Alex and Claire, co-founders of Claret Showroom, didn’t want cashflow to throttle their growth and set out to find a solution.

As a distributor for brands in new markets, they buy stock direct before re-selling to retailers. By doing this, they achieved a strong increase in gross margin but require more working capital, to fund their wholesale model.

Growth Story #2: Exploring new markets with Claret from Growth Street on Vimeo.

Claret Showroom is a fashion distributor representing Australian and American brands to retailers in the UK and Middle East including the likes of ASOS, Urban Outfitters, Net A Porter and Selfridges. They run quarterly sales campaigns in the London and Paris showrooms inviting retail buyers to see new styles and pre-order for the upcoming season.

The company pays its suppliers well before they collect payment from their retail customers. A typical arrangement would have the company pay its supplier on delivery of goods, and after selling that stock to a retailer, they would wait 30 to 60 days for payment. As the company’s order book grows so does their working capital requirement. At the point that Alex and Claire came to Growth Street they could see that without access to finance, they would have to slow down their rate of sales growth.

Claire and Alex investigated several options for financing this need including an invoice discounting facility from HSBC and private equity investment. They found that the invoice discounting offer they received required them to discount all of their invoices, which didn’t give them the flexibility they were looking for, and also would have charged them for a service even when they didn’t need it.

They found that taking equity finance would mean giving up control of their business, and in the long run would work out as a very expensive option.

With Growth Street, they have the peace of mind that their credit facility is there when they need it but there is no requirement for them to use it. Having that cushion means that Alex and Claire can focus their energy on building up their business rather than managing cash flow.

Claret Showroom has big plans for the coming year including further expansion online through Grazia Shop, and into European markets. Further down the line they have their sights set on New York and LA. 

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