Pentland Brands chief executive Andy Rubin has warned that consumer spending and the UK economy is unlikely to ever return to the heady heights of the early noughties, while the bosses of British brands Ben Sherman and Bench believe spring 11 is the earliest prospect for any upturn.
Speaking at the inaugural Drapers Next Generation Academy event at The Soho Hotel in London last week, Rubin said the consumer mindset had shifted dramatically and therefore future sales growth for fashion in the UK would be limited regardless of when the downturn ended.
Rubin said: “We’re (the UK) completely screwed. The Government has messed up. We have more debt than we’ve ever had before. [Whoever the incoming government is] they’ll have to cut the deficit so rapidly that we are all going to feel the pain.
“VAT will go up to at least 20% and every other tax is going to go up. How can we win? We have to buy and grow our market share. People are still going to buy clothes but
it will be about who they buy them from.”
Rubin urged fashion businesses not to cut their marketing spend or investment in product to ensure they were fit to fight an impending market share battle. He added that fashion businesses should look to E7 countries such as India and China, where there was massive growth potential with the rise of their respective economies, rather than focusing on G7 markets to ensure long-term growth and survival.
Rubin’s sentiments were echoed by Peter McGuigan, chief executive of Americana, the group which owns young fashion brand Bench, who said: “I don’t see an upturn coming this year. It will be spring 11 before we start seeing any shoots of opportunity.”
Ray Kelvin, chief executive and founder of lifestyle business Ted Baker, said of the impending general election: “It might make things a bit more difficult. It could [hit sales] of bigger ticket items.”
Meanwhile, Ben Sherman chief executive Pan Philippou, who this week forecast sales would fall by a further 15% to 20% in 2010 due to the brand’s withdrawal from the womenswear and kidswear markets, warned that the general election and Christmas would give an indication of the future shape of the market.
Philippou told Drapers: “We need to get through this election and see how we trade at Christmas. We’ll have a new government and we’ll know where we are in terms of our fiscal policy. It’s too early to call it.”
For the full fiscal 2009 year, Ben Sherman, which is owned by US supply giant Oxford Industries, reported losses of $8.6m (£5.7m) on sales of $102.3m (£67.9m), against sales of $133.5m (£88.5m) in 2008. Despite the forecast sales decline for 2010, the brand is expected to be more profitable this year.
Philippou, who is part-way through a strategic review at Ben Sherman after taking over as chief executive in January following the retirement of Miles Gray, agreed with Rubin that overseas markets offered opportunities for growth. He said he would focus on new markets in Asia rather than on the “mature” UK market.
Separately, Ben Sherman managing director David Boyne has left the business and will not be replaced.
Bench meanwhile has appointed Kay Twine, former managing director of hosiery business Pretty Polly UK, to the new role of Bench UK managing director. Twine will be charged with scaling back the brand’s distribution to focus on more upmarket accounts and independent stockists.