The owner of struggling retailer Jack Wills is seeking to sell its majority share. Drapers analyses what any new owner will need to do to turn around its fortunes.
Once one of the coolest brands in the UK, Jack Wills is in the midst of a turnaround plan and is looking for a new owner as private equity owner BlueGem Capital Partners seeks to reduce its stake to a minority holding.
Amid tough trading on the high street, the brand is understood to be having difficulty after “disappointing” spring sales. BlueGem has appointed KPMG to carry out a review of the business and explore future opportunities.
Details of Harlow’s turnaround strategy have not been disclosed but industry insiders have said the retailer needs serious work to inject creativity back into its product and marketing and create fresh appetite with a younger audience if it is to survive.
“It’s not cool to wear Jack Wills. It’s that simple,” says one brand source. “It lost its desirability at least three or four years ago.”
Jack Wills’ most recent financial results, for the year to 28 January 2018, showed a pre-tax loss of £29.3m and a drop in adjusted EBITDA of 219% year on year to a loss of £7.5m. Turnover fell by 1.1% to £129.3m.
When the results were released in March, a spokeswoman said: “2017/18 was a challenging year for Jack Wills, but the business has moved on significantly since then. The improved processes and tighter financial disciplines we have put in place helped halve the EBITDA loss for 2018/19.”
She added that the business was “on a firm footing as we seek to return to sustainable growth by improving our product range and re-engaging with customers via the right channels.”
One source close to Jack Wills believes a change in wider fashion trends had hampered the brand: “The product itself isn’t very distinctive – it’s the lifestyle that gives it that appeal. But there’s much less of that audience now than there was. The preppy look has declined.”
Jack Wills leveraged the success of brands such as Abercrombie & Fitch in the early 2000s to create a “university lifestyle” image around the clothing.
Abercrombie & Fitch has suffered similar problems as its target demographic moved away from logo-heavy merchandise, but it is slowly making a comeback. CEO Fran Horowitz has been leading a turnaround plan since 2017.
Comparable sales grew 5% in the final quarter of 2018/19, which marked the brand’s first quarterly growth in five years.
There are not enough voices and they miss out on the experience of other people
James Barden, Rextrek
If Jack Wills is to do the same, it needs to start to create a product and brand that resonates with the next generation of consumer, says retail analyst Richard Hyman: “It’s less about what went wrong with the business and more to do with what happens to very stylised brands. While it’s in fashion, it’s fine. As soon as it’s not in fashion, there’s very little wriggle room to do anything else. Jack Wills has a very particular handwriting. It will be very difficult to sell product that doesn’t conform to that very narrow, specific look.”
James Barden, owner of supplier Rextrek Group, which does not supply to Jack Wills, believes the brand has limited its creativity by being too inward-looking: “They don’t deal with many suppliers. They want to take it in house.
“They think they can do everything directly to save costs, but when you work with more than one supplier, you bring in new ideas. There are not enough voices and they miss out on the experience of other people.”
Another supplier agreed: “The buyers haven’t got the vision to take a business forward. They’re always looking at cost over design. Jack Wills should be a brand that’s full of fun. They need to be more creative than just writing ‘Jack Wills’ on everything. Jack Wills didn’t move with the times. It isn’t trendy any more.”
Price is another issue sources highlight as problematic. Jack Wills hoodies are currently priced between £49.95 and £64.95 and polo shirts cost as much as £54.95. However, in a saturated market, teens can easily purchase more affordable clothing from online brands that carry more cachet.
They need to scrap everything, start again and use social media to get the right people wearing it
Making shoppers aware of new styles is a further challenge, says Hyman: “The customers Jack Wills sold to at its peak are now in their mid-twenties. They’ve moved on. Getting the younger siblings of those customers to follow something that’s not their own style is very difficult. They want to express their individuality.”
The brand has failed to connect with the Instagram generation. It has 265,000 followers on the photo-sharing site, compared with rivals such as Superdry, which has 476,000, and Ted Baker, which has 968,000.
One supply source says drastic measures would be needed to reposition the brand: “They need to scrap everything, start again and use social media to get the right people wearing it.”
The brand source agrees: “They need to do guerrilla marketing, work with influencers and do events to get the right people wearing it. It needs serious, clever marketing.”
Despite its financial difficulties, Jack Wills opened 12 new stores in its 2017/18 financial year and refitted three, while closing only one. In September 2018, it revealed it was in discussions with landlords to reduce rents, but ruled out a company voluntary arrangement. In total, it operates more than 90 stores in the UK, US, Hong Kong, Singapore and the Middle East.
Although they are costly, one retail chairman believes that shops may be one of the brand’s better assets: “The stores have a good feel to them and the staff in them have always been very good. The store is probably slightly better than the online offering because you lose some of that lifestyle ambience of Jack Wills [when shopping online].”
Beyond its store estate, investment from a new owner could be a lifeline for Jack Wills, but its problems are more deeply rooted than cutting costs.
Hyman is sceptical about the prospects of a revival: “The problems Jack Wills faces are really difficult, and there are too many players in the market. Every time there is a CVA, it’s just prolonging the inevitable. Is the Jack Wills brand relevant any more? Lowering costs just kicks the can down the road.”
The source close to the business agrees that a turnaround will prove difficult in the current climate: “Suzanne is a good product person who has good supply chain experience, so I don’t see why she couldn’t turn it around, but the problem is they’re running out of cash. It’s not the environment to be turning a business around in.”
Jack Wills declined to comment.
The Drapers Verdict
The Jack Wills brand was an essential purchase for a generation, but its customer has grown up while the brand has not.
To connect with younger customers today, it needs to cut back on overly branded products and focus on more creative designs. Fresh suppliers could help inject a more trend-focused offering and help it compete with its fast-fashion rivals.
A digital marketing strategy that incorporates a stronger social media presence and influencer campaigns could help put the brand back on the map with a new teen demographic.
However, changing perceptions of a brand is a slow process and difficult trading conditions for the whole of the UK high street will make this even more challenging. Jack Wills may need to look at further refinancing and restructuring options in to see it through rocky times ahead.