Big news this week for four of our major high street fashion chains as Aurora Fashions undergoes an extensive restructure - but what does it mean for the sector?
The move effectively splits Aurora into three separate businesses, with Oasis and Warehouse now falling under the control of former Oasis managing director Liz Evans, who will take a chief executive role of the (oddly named) group business Fresh Channel. Coast is being hived off (in parallel with the already separate Karen Millen business) and will operate independently under managing director Margaret McDonald.
As a group, Aurora posted some disappointing results at the end of 2012 with a £2.3m dip in EBITDA for the full year, but much of that was pinned to the now-departed Bastyan business. While international and online expansion seemed to be paying off with 15% and 28% growth respectively over the same period, the UK remained, and remains, extremely challenging. Aurora had also invested a lot of money in technology to support its omnichannel vision (this should pay off longer term but was a big outlay) and introduced 90-minute delivery, which is certainly costly in terms of logistics but arguably has raised the fascias’ profiles with customers.
So moving on to the restructure, it seems to have been motivated by a need to make the four fascias leaner and more nimble, and to plough money from cost savings back into the businesses. With the right technology and product teams in place, those costs are being found by removing the senior management team (chief executive Mike Shearwood and chairman Derek Lovelock are among those to step down, joining the recently departed Warehouse managing director Meg Lustman) and introducing a new back-office stock system that will save money and enable more personalised marketing communication. This is refreshing in an industry that usually cuts the indians, not the chiefs.
There’s no doubt all four chains remain in choppy waters, with too many bricks-and-mortar stores and competition at its height for female spend. It is likely Coast and Karen Millen sell-offs are in the pipeline. Oasis is assumed to be doing the best of the four. Warehouse has struggled in the past with brand differentiation, something the new Fresh Channel is likely to prioritise to ensure its two fascias don’t end up competing.
It is positive, though, that Liz Evans has been chosen to lead the larger piece of the new business. As a fashion retailer born and bred - she started out on the shop floor - she has been behind much of the business innovation within Aurora in recent times.
Meanwhile, there are likely to be a few people running the slide rule over Karen Millen (a buyout by the old senior team has been much rumoured) and Coast.