Alteri Investor’s acquisition of Austin Reed Group late last Friday will provide a temporary respite for the business, but the turnaround will be tough and womenswear may not be central to its future proposition, sources have told Drapers.
The group, which comprises classic men’s and women’s wear chain Austin Reed and mainstream womenswear retailers Viyella and CC, trades from around 150 stores and concessions.
Alteri, a joint venture between US private equity group Apollo Global Management and Gavin George, former chief executive of restructuring specialist GA Europe, first became involved with Austin Reed Group when it provided the business with a three-year loan in May 2015.
Drapers understands Alteri has acquired the loan notes and shareholder capital of the group from Darius Capital, which is controlled by property tycoon Guy Naggar, to simplify the stakeholder structure and protect its interests for an undisclosed sum.
Austin Reed Group is currently working with turnaround consultancy AlixPartners to review the business, a year after it entered a company voluntary arrangement (CVA) and closed more than 30 underperforming stores. In its latest available results, the group made a £1.3m loss in the year to January 31 2014.
The Austin Reed chain, which was founded in 1900 and holds two royal warrants, is thought to hold much of the appeal for Alteri, a source close to the situation said.
“I wouldn’t be surprised to see them let some of the womenswear disappear and menswear to continue on a much smaller scale,” the source said.
“Womenswear has let them down for the last couple of years. Alteri has bought it for the Austin Reed name and I think they’ll focus on menswear and maybe someone else will take on womenswear. CC [and Viyella] have got too much baggage to compete now with the likes of Phase Eight and Mint Velvet.”
Austin Reed acquired CC, formerly known as Country Casuals, in 1998, and rescued part of Viyella, which was founded in 1784, out of administration in February 2009.
“The deal is a stay of execution,” said retail analyst Richard Hyman. “Hopefully, Alteri can help the business not just keep the wolf from the door but get it on a more sustainable footing. However, it’s going to be tough.”
He said the group’s limited exposure to womenswear, which is proving a particularly tough market at the moment, could work in its favour. There has also been a revival in the men’s formalwear market, although it has been driven by a younger shopper than Austin Reed’s core customer.
“The CC brand wasn’t in great shape when Austin Reed acquired it and has probably held them back,” he said. “The business’s fortunes will be decided by menswear and the cleaner it can be, the better.”
Alteri acquired footwear retailers Brantano and Jones Bootmaker in October 2015. Brantano went into administration in January 2016 and Alteri later bought back 81 stores and 59 concessions.
It also gave German fashion house Basler a senior debt facility of an undisclosed amount in June 2015, as part of a takeover deal for the retailer and brand agreed by German private equity firm Tempus Capital.
Austin Reed and Alteri did not respond to requests for a comment.