Chief executive Christos Angelides’ dogged focus on product and people is helping Reiss to withstand the tough trading conditions on the high street.
Two years ago, the appointment of Christos Angelides as chief executive of premium retailer Reiss was met with a rubber stamp of approval by the industry, who pointed to his product background and international experience. Last week, these industry insiders were proved correct.
Reiss reported an 8.3% increase in sales to £186.3m for the year to 2 February 2019, and a 21.3% rise in EBITDA to £19.3m.
Recent trading is even more buoyant. Group sales for the 10 weeks to 13 April are up 27.9% year on year to £36.5m. UK like-for-like sales are up 27.6% and international sales up 38.6%.
This is against a backdrop of company voluntary arrangements (CVAs), store closures and a mixed bag of trading results from the rest of the high street.
The strong results are also in stark contrast to Reiss’s performance from two years ago, when operating profits slipped 12.1% to £15.2m in the year to 28 January 2017.
Reiss has attributed its turnaround to a reduction in promotional activity, and continued investment in people, operations and infrastructure. The firm also implemented RFID (radio-frequency identification) technology in UK stores, which aims to allow greater stock transparency.
But a key element of Reiss’s recent success lies with the refreshed product.
Angelides worked at rival retailer Next for 28 years, 14 of which were as group product director. He also spent a year in the US as president of Abercrombie & Fitch.
When he returned to the UK, after leaving the American retailer in December 2015, he joined French Connection as an independent non-executive director, before taking the reins from Reiss founder David Reiss in March 2017. Since then he has built up the design, brand and online functions.
One womenswear source tells Drapers the refresh was much needed: “I think there’s a very clear positioning that Reiss has, and that it had become a bit one dimensional [before Angelides’ appointment]. Reiss had become a bit too glamorous, its product more for a one-off occasion than high-quality regular wear.
“Now it is still well tailored clothing, but they’ve managed to make the range broader. It’s still high quality, but they’ve relaxed a bit. It is a really confident collection, more wearable and with more choice than a few years ago.”
If you make better clothes that people want, then you will sell more at full price and not at discount
Source close to Reiss
Retail analyst Richard Hyman says that Reiss has given other retailers a lesson in how to retail successfully: “The reason Reiss is so good really underlines what is missing from so many other retailers today. Reiss has had the courage to invest in its top line, not just focus on cost-cutting like everybody else is. It has become competitively much stronger but it’s done it really by keeping its handwriting.”
This has enabled Reiss to step back from discounting. One source close to the company says: “If you make better clothes that people want, then you will sell more at full price and not at discount. Stopping promotions alone won’t deliver higher margins – the perception of the product has to go up.”
A supplier adds: “From a customer point of view, they have it spot on. They know exactly who they are targeting, don’t wander off into too many different product areas and keep very much to their look. It has real brand identity. Clearly Christos has found a way to work with [David Reiss] and get his stamp on the product. The design team seems happy, too.”
International sales have been a focus and observers suggest Angelides’ short stint in the US will have helped in this respect.
Reiss will open 40 new points of sale worldwide during 2019, including 11 with Nordstrom in the US following a successful trial.
Pippa Stephens, associate retail analyst at GlobalData, says: “Last year Reiss launched on Nordstrom online [in the US], which helped lift their like-for-likes. Angelides will know where the best places to sell their products will be from his time in the States.”
One supplier adds: “Christos was excellent in the UK market. He took a job out in the States where he learned the hard reality of American retail, which is a tough school to go to. The secret with Reiss is that Christos understands fashion and has a great eye.
“The high street is a pretty boring place at the moment and I think he has put some good fashion in. It’s not edgy, per se, but he’s put style back in. Reiss was always known for this but he has put a twist on it. The ladieswear is fantastic.
“If you go back in time, George Davies [founder of Next] had a unique ability to know what women wanted to wear before they bought it and in a way Christos has that talent. He has some very capable people around, and some people from Next who know their stuff.”
Angelides’ focus on bolstering the teams, including several key hires from former employer Next, has set Reiss on the path to a quick turnaround.
“The product teams have changed and he knows how to do that,” says the womenswear source. “He’s appointed people he trusts. To make the turnaround as quickly as he has is unusual.”
Some point out that Reiss has also avoided some of its rivals’ woes, as it is stocked in John Lewis and Selfridges, rather than ailing chains House of Fraser and Debenhams.
“They have been more protective over where they are placed,” says Stephens.
Hyman adds: “Reiss haven’t harboured any delusions of grandeur. They didn’t think they could open stores all across the UK. They understand who their customer is and focus on the right locations. They haven’t chased growth at all costs, which a lot of retailers have done and are now paying the price.”
The investment in RFID will further help to drive sales and rectify any residual product availability issues.
“It will reduce customer frustrations by giving Reiss transparency on where their stock is and how it is performing,” says Stephens. “It opens up store stock for online fulfilment and should help reduce leftover product.”
The Drapers Verdict
The key takeaway from Reiss’s success story of the past year is one that lies at the heart of good retailing: get the product right and full-price sales will follow.
It helps that Reiss and Angelides are a natural fit for each other. Reiss had become too rigid and Angelides had the right mix of skills to ensure it delivers the styles customers want without losing its brand handwriting.