The bosses of several multiples and department stores have said the fashion industry in the UK is strong enough to survive the potentially “seismic” implications of the UK’s decision to leave the European Union, although currency volatility remains a primary concern.
House of Fraser
Nigel Oddy, chief executive of House of Fraser, said it will be business as usual today on the high street as the impact of the result is assessed.
“It has gone against what the pollsters said but it is too early to say what the impact will be on our industry and the business. All we can do is open the stores today and assess over the coming days and weeks on the impact it will have.”
Angela Spindler, chief executive of N Brown, said: “As business leaders we need to remain calm, take a pragmatic approach and look for the positives. After all, where we are going is new to all of us and we have to work together. At N Brown it is very much business as usual, and we remain primarily focused on our customers. Businesses who import will of course face the challenge of a weak pound in the short term, and clearly we will do all we can to mitigate this.”
She added: “Interestingly, however, leaving the EU could create further momentum for the UK sourcing agenda. We are already committed to this through our work with the regional textile growth fund which is designed to support manufacturing in the UK, and is particularly relevant given our Manchester roots. Let’s hope this outcome gives the initiative a further boost.”
Colin Temple, managing director, of Schuh said agreed that some refection is needed.
“Although a shock, we do need time to reflect on what it really means and not get carried away with some short term volatility on stock markets and currencies. It will effect footfall until everything settles down. If the pound continues to be weak against the dollar for a prolonged period it could affect some prices as oil is priced in dollars. It will take a few years to unravel, so let’s hope things settle down in weeks rather than months as uncertainty will affect people’s shopping habits.”
Fergus Patterson, managing director for Gant UK and Ireland, was optimistic that the UK retail landscape can withstand the uncertainty over the coming months.
“Whilst the outcome was clearly not what I would have wanted, I think the UK fashion industry will continue to grow and thrive as we are amongst the best in the world at what we do. There will undoubtedly be some short term volatility in both the stock market and foreign currency markets and the fear and uncertainty that creates may dampen consumer confidence.”
He added: “The unknown factor and therefore my major concern, is the speed at which the market will settle because it will settle in time. The UK has and always will be a resilient nation and should be able to negotiate trading agreements that ensure we can continue to prosper as an open trading economy with Europe and the rest of the world.”
Andrew Shapin, chief executive of Long Tall Sally, agreed that retailers will be able to adapt. “Although I strongly felt it was better to stay in, it should be positive for Long Tall Sally in terms of profitability as 70% of our sales are outside of the UK and half are in North America. Retailers are adaptable, flexible and dynamic so I believe the industry will adapt accordingly.”
Charles Clinkard, owner of the 33-store eponymous footwear chain said the weakening pound was his primary concern: “I feel we will see a long period of uncertainty as frankly I don’t think anyone really knows what will happen now. If the pound continues to weaken, retail prices will rise. The overall commercial and economic issues could be seismic.”
Shaun Wills, chief executive of Jacques Vert Group, agreed that currency fluctuation was likely to hit firms.
“From my perspective, our immediate concern is managing the currency risk by looking at both our sourcing and pricing for spring 17. I am still digesting the other implications,” he added.
Jon Moulton, chairman of Better Capital, the private equity firm which owns Jaeger, said the weaker pound would only be “short term”.
“In the short term the biggest affect is likely to be a weaker sterling. This means more expensive product putting pressure on prices and profits. Longer term there will be some benefit from a lower regulatory burden. Shops that enjoy tourist traffic should benefit from the weaker pound. Exiting the EU does not necessarily mean immigration walls - but it might - in which case staffing might be difficult in the most prosperous areas. One uncertainty is the future levels of duty on imports but we will find out.”
Jason Hargreaves, managing director of value chain Matalan, added: “It is too early to say [how this will impact the industry] but currency is the main concern and whether generally things pick up post referendum as it had a negative effect beforehand.”
However Sports Direct warned investors that market volatility and changes to sterling/dollar exchange rates are likely to impact purchases that it has not currently hedged for, which is the 2017 year period and beyond.