Lately, not a week goes by without the mention of a CVA and this week is no exception – the latest being high street footwear staple Office, which has appointed restructuring advisers to assess its financial position amid “tough trading conditions”.
The tough climate is really beginning to show in business results. CVAs aside, Jack Wills is said to need more cash or a restructuring before the end of the summer to counteract poor spring trading. Last month, Quiz reported a 97% fall in profits to £200,000 in the year to 31 March, down from £8.5m the previous year.
Superdry warned in May that full-year underlying profit before tax would be lower than current market expectations following “weak” wholesale and ecommerce performance, and postponed its results announcement.
The high street is in flux and as we wait for the Conservative party to decide the next prime minister, the fashion industry is crying out for support from the government – a reduction in business rates, and support to meet environmental targets would go some way towards alleviating the gloom.
However, despite all the challenges, the success of some brands shows it is possible to go back to basics, define a clear strategy, implement a seamless back-end operation and find new ways to engage their customers. We are seeing retailers that are concentrating on just that with successful results. New Look has made its way back into the black and as Primark celebrates its 50th anniversary, the business is in a strong position.
Once a solid foundation is secured, retailers can once again start thinking about innovation. Businesses are beginning to realise that innovation doesn’t always come from within – it comes from working with partners that can excel in areas a legacy business can not. Farfetch’s Dream Assembly start-up incubator is an example of how a business can work with partners to think outside the box and collaborate on innovation.
As confusion continues around Brexit and the future of the high street, retailers must ensure they are focusing on a strategic turnaround plan to build a robust operational foundation and then look to innovate to survive and thrive.