RETAIL ROLLERCOASTER: A YEAR MARKED BY ADMINISTRATIONS, ACQUISITIONS AND MIXED FINANCIAL PERFORMANCE

After a mixed year in retail, Retail Consigliere looks at how British retailers have performed in the last twelve months, how online retailers fared and where this leaves the high street.

 

Fashion retailers have had a particularly tough time of late, with the likes of Agent Provocateur, Austin Reed, Jaeger and Jones the Bootmaker all entering administration. Business advisers Opus Restructuring predict this trend will continue and that almost half of British fashion retailers face going bust or failing by 2019.

 

Moreover, according to Opus, profits among the large high street fashion retailers are down 28% from two years ago and borrowings have risen by 11.6% in the same period. These figures are accompanied by news of big market players such as Sports Direct reporting a 57% profit slump, John Lewis cutting their annual bonus scheme and Next witnessing its first annual profit fall in eight years.

 

These negative figures have been attributed, in part, to increasing supplier costs as the value of the pound has slumped against the euro and the dollar since the EU referendum. This has had a knock-on effect on store prices, which have seen a 3.3% increase since this time last year. UK consumers are also spending less on the high street – spending is down 85% since Boxing Day – and large pre and post Christmas sales have been blamed for wiping out store profit margins. A 19.5% year-on-year growth in online retail sales has also received a portion of the blame and prompted traditional high street retailers to fight back through their own websites: 25% of sales at John Lewis are now online and Tesco’s online revenue stands at £2.9 billion, second only to Amazon. However they face tough competition from e-commerce platforms such as Amazon, Boohoo, Yoox Net-a-Porter and Asos, whose growth shows no signs of abating.

 

It’s not all doom and gloom however, as the Easter holidays boosted sales to their highest levels since 2011 and the last 6 months have marked a string of notable acquisitions. Sainsbury’s acquired Argos at the tail end of 2016 in a continued push to make its customers’ lives easier. Luxury British fashion brand Jimmy Choo was also recently acquired by Labelux, which claims it has “enormous growth potential”. Further, some retailers – for example, JD Sports, Boux Avenue and ASOS – have seen explosive growth in the last twelve months.

 

Looking to the future, retailers who manage to combine greater investment in modern technology and a unique customer experience have been tipped to stand out in what remains a highly competitive marketplace.

 

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