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Analysis: What’s blowing at Whistles?

When ex-Topshop supremo Jane Shepherdson took over Whistles in a management buyout in 2008, thanks to her creative eye the brand became a much sought-after and inspirational contemporary fashion staple.

Has Whistles gone off the boil?

However, in recent seasons Whistles’ star has appeared to wane and, following its sale to Phase Eight’s owner, Foschini Group, in March questions have been raised about its future direction. 

Sales grew an impressive 11% to £62.9m in the year to January 31 2015, its most recently published figures. However, sources told Drapers it failed to capitalise on this momentum and the brand’s desirability has dipped over the past year.

“It went through a strong phase for a while but it seems to have gone off the boil,” said Maureen Hinton, research director at retail analysis firm Conlumino.

“It doesn’t make as strong a statement as it did in the past. And it probably has a lot more competition now with Finery London and Jigsaw nipping at its heels.”

Another industry observer echoed this: “It is expensive and other cheaper brands such as Finery London and & Other Stories are serving their quirky customers better, and taking their market share. There’s lots of cute stuff on [the website] but I don’t want to spend £200 on a dress unless it’s super-special.”

Despite its sales uplift in the year to January 2015, the chain, which has almost 50 stores in the UK and is stocked in department stores such as Selfridges and Harrods, slumped into the red. It made a pre-tax loss of £2.4m, compared with a £1.9m profit the year before.

Directors said its profitability had been “impacted by one-off costs associated with the launch of menswear, expanding into the US and the Whistles website, as well as a difficult trading environment”. Whistles was not able to disclose any more recent trading figures.

Whistles invested £378,000 in the launch of its first menswear collection for autumn 14, accounts filed at Companies House show, and opened its first dedicated menswear store on Boundary Street, east London, this March. Yet it remains to be seen if menswear can provide the boost it was expecting. 

Hinton said: “It takes a while to build up the kind of brand recognition you need in menswear and Whistles is such a strong womenswear brand. It’s easier to go from menswear to womenswear.”

In March, South African retail business Foschini Group bought a majority share in Whistles for an undisclosed sum.

Some people have expressed concern about what this will mean for Whistles, particularly if Foschini is determined to align it with its other recent purchase in the UK, Phase Eight – a womenswear retailer with a very different proposition.

Phase Eight chief executive Ben Barnett and chief operating officer Lee Harlow have joined the Whistles board as directors, but no other changes have been confirmed as yet. Shepherdson remains CEO.

Drapers understands that, although the intention is to run Whistles separately and maintain its individual brand identity, departments such as logistics, procurement and IT could be merged with Phase Eight. However, a recruitment source told Drapers there was no question of merging the buying and design teams: “They don’t want to share an identity,” he said. 

A supplier to Whistles said: “The main issue will be cross-sourcing, as Phase Eight uses cheaper manufacturers and affordable fabrics, whereas Whistles has a much better-quality supply base and fabrics.

“The new owner will be looking at what its best options are to maximise its return. Three or four years ago Phase Eight went to a cheaper supply base and there’s a worry Whistles will do the same.”

Doug Murray, chief executive of Foschini Group, said there were no plans to move the Whistles head office from its current location on Eversholt Street in north London or make any redundancies. “We are focusing on growth for the business,” he added.

Some observers said the sale to Foschini could be a good thing for Whistles.

The recruitment source said: “Whistles should be happy because it wasn’t making money before and, with the guidance of [Phase Eight’s] Ben and Lee, it can cut some central costs and make the business profitable … it needed more control over its overheads. I don’t think its position was sustainable before.”

Drapers understands the retailer’s credit insurance was pulled the week before the sale to Foschini.

The Whistles supplier said: “Bills were slow to be paid before the sale as cash flow was tight. There was a sense that they were keeping it as tight as possible. Cash flow is better now.”

With its new owner and Phase Eight management on its board, all eyes will be on Whistles to see if it can regain its position as one of the high street’s most coveted contemporary brands.

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