Chain accused of ‘losing sight’ of core customer as move towards more premium product fails to reignite sales.
Young fashion chain Republic is understood to be looking to offload as much as 40% of its store portfolio after its plan to introduce higher-end brands failed to take off.
Sources told Drapers the retailer was considering the closure of 50 of its 120 stores to reduce costs from loss-making locations.
Earlier this month it was reported that Republic was looking to switch to monthly rent payments to help control its cash flow. The chain is understood to be in talks with landlords and has halted its store expansion plans.
Insiders indicated that as part of rent negotiations loss-making stores will be put under review.
Industry insiders said Republic had found the move towards premium products tough in the current economic climate. One brand’s manager said womenswear had performed particularly badly, and was “a noose around the neck” for the retailer.
He added: “[Republic] has got so much product and it looks too dense - it’s difficult to sell premium product when it’s crammed in like that. It’s difficult to sell brands such as G-Star and Diesel against own brand.”
Another industry insider said: “Sales just aren’t holding up and they’re finding it really tough.”
One supplier told Drapers that the problems stemmed from the chain “losing sight” of who its customer was.
“When [chief executive Paul Sweetenham] came in, Republic made a big fanfare about bringing in lots more higher-priced brands but that hasn’t worked for it. Its core customer is in the 12 to 18 age bracket and can’t afford to be shelling out on big-name brands.”
Sweetenham joined Republic from off-price retailer TK Maxx in March last year. On joining the business he vowed to push forward its expansion plans and at the time of his appointment told Drapers he was hoping to introduce a “healthier brand mix”.
Following years of solid results, trading deteriorated at the retailer in the year to January 29, 2012. Sales declined by 2.3% to £177m and operating margin reduced to 2.1% (against 15% in the previous year).
Pre-tax profit fell from £27.3m in the previous year to £3.2m. Sources told Drapers that profits are expected to
have diminished further for its next financial year.
A spokesman for Republic said: “There are no imminent plans to close stores.”