PRICE OF A COSTUME
PROFITEERING CHARGE CASE AGAINST AUCKLAND DRAPERY FIRM By Telegraph—l'reea Association. Auckland, September 21. A charge in respect to tho price at which a lady's costumo was offered for salo by John Court, Ltd., was heard before Mr, J. W. Poynton, S.Sl•> to-day. Tho. defendants (for whom Mr, A. 11. Johnstouo appeared) were charged that they "offered for salo a lady's Kaiapoi costume at twelve guineas, a. price which is unreasonably high." Mr. Hunt, who conducted tho prosecution, stated that it would be shown that the costume in question was offered for sale on Juno 8 at twelve guindas. It would bo shown that tho costume was ono of three obtained from tho Kaiapoi Company in March, and that tho gross price of this particular costume was «C 7 75., less trade discount of 3J per cent., milking the net cost £1 le, 6d-. The proportion of tho postage on this costumo was negligible, being tourpence- Tho position, said counsel, thus was that the defendants had made a, gross addition of Jib 10s. Cd. to tho cost of_ the article, representing a gross profit of 78 per cent. Tho Board of Trade bad inquired into the matter and had authorised the prosecution. The defendants had made an explanation that the costumes were fashionable goods, and that high prices hail to be charged at the beginning of the season to provide for loss at the end of tlie season. That 6eemed to be the principle; that a big price was put uii with an idea that persons who were u;eakminded enough would pay it. Evidence would be given to show that some other large and roputablo firms in the fiauie business worked tho class of goods on a definite percentage basis, with an average of 50 per cent, Defendants' balfmcesheet for the year ended August, 1919, showed tho gross profit on turnover to be 21 per cent. _ . L. E. Phillips, secretary to the Prices Investigation Tribunal, stated that in June ho noticed the costumo in Court's 6hop, marked twelve guineas, nnd inquired the cost price, with tho result that ho brought tho matter bofore the tribunal, Defendants were asked to justify the price, and they wroto stating that the costumes wero fashionable goods that liad to be cleared out every season. Tho result was that ai price had to be charged at the beginning of the season to cover the loss; made at the end of the season, when the goods were, marked down week by week until it was necessary finally to clear them regardless of loss. It was mentioned also that costumes in "out" or extra large sizes cost 12s.\ more, which was not charged to tho customer, and that costumes priced at over 12 guineas wero altered for customers free of charge. It was admitted that the gross cost of the costumo was =£7 75., and the net cost £7 Is. 6d,. the price complained of representing a gross profit of 78 per cent, on cost, and 13 per ceut. on turnover. David Meikle, draper, snid it was the practico. in lids costume department to make additions to cost price ranging from 10 per cent—and in some cases as low as 35 per cent—to as miich jis Go per cent.,nnd in exceptional cases 70 per cent. Mr. Hunt:.You mean by an exceptional case that thQ costume is. so ultra fashionable that it is not likely to remain a good selling proposition. Witness; "Yes." He added that if the costume in question, had come into his stock he would have made an addition of about 60 per cent. lio compared the costume with one which cost iliim ss„ and which he marked at <£14 10s., and had since reduced to £11 15s.
To Mr, Johnstone: lie aimed-to make' a gross profit on returns of 40 per cent, in his mantle department. Louisa Burton, buyer for the costumo dispartn'fMit of Slessrs. Smith _ and Caugliey for the past 16 years, said the addition, mado to cost price by her department varied from 40 to GO per cent. Tho aim was to get 33 i-3 per cent, on •returns.- ; This closed the case for the prosecution. Defendants' Case, . Mr. Johnstone said that in fixing tlie prices of the costumes at .£l2 12s. the defendant company followed tho practice of. tho drapery trade generally, which had been its own custom since its establishment. Numerous conditions, such as fashion, colour, and design, offected the sale of goods. The mantle department was an exceedingly risky one, for that reason. The defendant company bought (ivo costumes from the Kaiapoi Woollen Co., and it followed the practice it and every other drapery firm.followed in similar circumstances. Three of the costumes were bought «t £7 7s. each, and two, which were over-sizes, at ,£7 19s. each. The oash discount of 3| per cent, could not bo taken into account, because if it were not allowed the company would be entitled to charge interest. It'was purely a matter of • finance, and must be disregarded in tho present proceedings. Taking into consideration' the necessity for alterations, and tho fact that some garments would not sell at oil, or 'would have to be sacrificed in order to sell, it would bo realised that if the costume department was to pay it'must yield an all-round profit of -10 per cent. Not one of tho costumes was so]d for JCI2 12s. After three months' display they were reduced to J6lO, and later to i'B Bs., at which figure two were sold. The remaining three were' marked at ,£G Gs., two being sold. It was a well-recognised economic principle that in' fixing'the prices of goods the number that • was likely to lie sold must be taken into consideration. Thomas Davidson, general manager-of the defendant company, said that the costumo department was under his own supervision. "He . gave evidence regarding the pricing of costumes on the lines of counsel's statement. Ho looked for a net return on costumes of from 33 1-3 per cent., to 41 per cent, to 80 per cent. , J. R. Rendell, managing director of Rendells, Limited, drapers, said flic addition of a uniform rate of profit to the cost of goods was not followed in the drapery trade. It was not until the end of the year that it was lenown what tlie profit? were. A profit of 33 1-3 per cent, was regarded as the usual margin for 6afo departments. The mantle department, however, was very risky, being tho next in riskiness to the miilinerv department. Hearing of the case was concluded tonight. Tho Magistrate said he would deliver a written judgment.
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Dominion, Volume 13, Issue 311, 25 September 1920, Page 8
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1,105PRICE OF A COSTUME Dominion, Volume 13, Issue 311, 25 September 1920, Page 8
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