Amy Smilovic, founder of fashion brand Tibi, eliminated $70 million in annual sales to refocus on profitability and long-term sustainability. The strategic shift underscores a growing trend among retail leaders to prioritize margins over volume in a volatile market.
- Tibi eliminated $70 million in annual sales to improve profitability
- Gross margins rose from 54% to 67% post-restructuring
- Average order value increased by 32% despite lower overall revenue
- Net income grew 29% despite a 15% decline in total revenue
- The decision aligns with investor focus on sustainable margins over top-line growth
- Strategic shift mirrors broader trends in retail amid inflation and supply chain pressures
Amy Smilovic, founder of the New York-based fashion label Tibi, made a bold move in 2023 by intentionally discontinuing high-volume, low-margin product lines that generated approximately $70 million in annual revenue. The decision was part of a broader restructuring aimed at improving gross margins and reducing reliance on discounting strategies that had eroded profitability over the prior five years. The shift came amid rising operating costs and shifting consumer demand, particularly in the apparel sector, where inflation and supply chain volatility have pressured margins. By streamlining product offerings and focusing on premium-priced, made-to-last pieces, Tibi increased its average order value by 32% and boosted gross margins from 54% to 67% within 18 months. This strategic pivot has positioned Tibi as a case study in disciplined retail management, especially in contrast to larger players still chasing top-line growth. While the company’s total revenue declined by 15% in the year following the change, net income grew by 29%, demonstrating that not all growth is created equal. The move also reflects broader investor concerns about the sustainability of rapid expansion in consumer-facing industries. With equity markets showing increased sensitivity to margin trends—evidenced by a 12% drop in apparel sector valuations over the past year—Tibi’s approach may influence other retailers to reevaluate their growth models.