Too many fashion brands lose money.
Here’s how to fix it.
At Grapefox, we’ve audited and benchmarked around 100 fashion brands in the last two years.
And to the surprise of many, a lot of them are either losing money or barely breaking even.
So how do you go from bleeding cash to stability in just a few months?
Here’s the truth:
→ Tough decisions will need to be made
→ People will have to go
→ And a lot of things must be cut
There has to be a full shift in mindset about how things are managed.
That’s often the biggest barrier. Founders delay the hard calls until it’s too late.
The Root Problem: Inefficiency
Let’s break it down.
→ Most DTC brands we’ve seen are inefficient
→ They spend money on things they don’t need
→ Their fixed costs are too high
→ Too many people, too many tools, too many layers, too much complexity
First step: bring fixed costs down to 10% of top-line revenue.
→ If you’re making €200,000/month, fixed costs should be no more than €20,000/month
This is a major shift. But it’s achievable.
→ We’ve seen what the best brands in this space spend
→ We know these numbers are realistic
But yes, it requires hard decisions.
Next: check your margins.
→ After all variable costs (COGS, credit card fees, packaging, shipping)
→ You need to keep AT LEAST 55%
On a €200 product, you should keep at least €110 after all variable costs. (last-mile)
Go below that, and marketing becomes a losing game.
The Growth Formula
Now that you’ve created some breathing room, it’s time to push harder with paid advertising — to generate cash and move stock:
→ Be ready to spend 25 to 30% of your revenue if you want to scale
→ If you aim for €500,000/month in revenue, you’ll likely need €125,000/month in ads
It’s possible to go lower (around 20%), but I wouldn’t count on it if the brand is struggling.
The formula is simple:
→ Cut costs on one side
→ Increase revenue on the other
This is what usually changes fashion brands fast.
And the results can be immediate.
What stops most from doing this?
→ The founder(s)
But I promise you: it’s possible.
And it’s the fastest, most effective way to turn around a fashion brand that’s losing money.
We’ve done it many times. We’ve seen what works.
