Austin Reed has appointed Deloitte to work on a strategic review of the business after it made a £1.29m loss in the year to January 31, 2014.
Darius Capital Partners, which owns Austin Reed Group, is thought to be in discussions with the auditor over a company voluntary arrangement. A CVA would allow the retailer to reduce its debts following discussions with creditors, while continuing trading.
A spokeswoman for Austin Reed said: “Austin Reed Group is currently working with Deloitte, the professional services firm, who are assisting us with a strategic review designed to maximise the opportunities for our businesses.
“No decisions have yet been taken and we are currently clearly focused on the trading opportunities ahead of us during the important Christmas period and completing the work to relaunch our websites on a new platform early next year.”
In its latest accounts, Austin Reed Group, which as well as classic menswear and womenswear chain Austin Reed also includes mainstream womenswear retailers Viyella and CC, made a pre-tax loss of £1.29m on sales of £109m in the year to January 2014, against a pre-tax profit of £1.77m on sales of £113m a year earlier.
The group, backed by investors Guy Naggar and Peter Klimt, has more than 260 shops and concessions in the UK.
“Like many other retailers, Austin Reed has a legacy store estate so if it can jettison some of the stores and reconstruct the cost base to give it the chance to make a reasonable return, then this is very timely,” said retail consultant Richard Hyman.
“It is a substantial business that has a good legacy – there aren’t that many people in that segment of the market so they ought to be able to carve out a good business in that area.
“Austin Reed should look at it as an opportunity. It is good that they are the first of what will be many in a similar position; the key is to be doing it with a clear view of where the market is going to be, not where it is today.”
One men’s tailoring brand said: “This doesn’t come as a surprise, but Austin Reed needs to use this to reinvent itself and come back stronger. It has a classic, staid offer; it doesn’t need to be young and fashionable but it does need to become exciting and inviting.
“It is a heritage name and the high street and industry would be poorer without it.”