Johnstons of Elgin, a leading producer of quality cashmere knitwear and accessories, is said to be on course for a good trading year after emerging from one of the toughest periods in the company’s 213 history.

Speaking to Glasgow’s The Herald newspaper, Managing Director, James Dracup said the company has seen a large increase in demand across all areas of the business this year as retailers rebuild stocks of accessories such as gloves and socks, after running them down during the global economic downturn.

Last year’s cold winter is also said to have lifted demand for Johnston’s cashmere knitwear in many countries. Johnstons, a privately-owned company has grown sales in recent years, of products that it makes under its own brand and of private label goods it produces for a high-end client list that includes names like Burberry and Louis Vuitton.

According to James Dracup Johnstons has also benefited from the increasing success of efforts to gain international recognition for Scotland as a source of quality products in the rapidly growing consumer markets of Asia. “The ultimate irony is that an industry that has had to compete against low- cost imports is now benefiting from the development of consumer economies in that part of the world,” Mr Dracup told The Herald. The trend is also said to have boosted demand for prestige labels.

Commenting on the state of the UK economy, Mr Dracup told The Herald that directors are wary about the potential impact of cuts in public spending on the UK economy, although he does not expect a double-dip recession. However, Mr Dracup noted that much of the production that Johnstons sells to UK clients is bound ultimately for export markets. Mr Dracup, however, is said to be far more optimistic about the short and medium-term outlook than he had been last year.

Johnstons’ Directors will try to achieve operating efficiencies in the company’s accessories and knitwear manufacturing plants, in Elgin and Hawick respectively, in order to offset anticipated increases in the cost of commodities and power.

Mr Dracup said the company had been increasing its workforce to make the most of the opportunities it sees although according to The Herald the latest accounts for Johnstons of Elgin show the company had a tough time in 2009 amid the global downturn. It made £20,000 pre-tax profit, compared with £859,000 in 2008, the newspaper said.

“2009 was perhaps the most challenging year that the company has experienced for a long time,” the directors’ reports said.“The effects of the global financial crisis impacted heavily on demand early in the year in an already seasonal business ... There was substantial destocking of inventory in the supply chain.” Turnover fell 3%, to £38.4m, from £39.7m.

Source: The Herald