As sailing brand Henri Lloyd is thrown a lifeline through a pre-pack administration, Drapers investigates what went wrong and what lies ahead for the business.
Henri Lloyd said it was forced to enter administration because of “challenging trading conditions on the high street”, amid speculation that troubles at House of Fraser played a key role in the brand’s demise. However, industry sources have told Drapers that cashflow issues, confused ranges and a lack of focus could have been larger factors.
One source said: “Henri Lloyd is a super brand, but it has been badly managed. Cash is king, and its bottom line was not good. I think it could make some serious money [with the right strategy in place].”
Henri Lloyd Limited posted turnover of £17.7m for the year to 1 April 2017, returning gross profit of £6.12m and operating profit of £247,688.
The brand was founded in Manchester in 1963 by Henri Strzelecki. It was run by his sons, Paul and Martin Strzelecki, as chairman and chief executive respectively.
Retail analyst Richard Hyman said: “Brands such as Henri Lloyd have chased growth, but there are incremental costs radiating from the core. In a growth market, that’s just about doable, but it’s not sustainable in the current climate.
“This is a market where leadership is critical. Can Henri Lloyd sufficiently differentiate? I’m not sure. Can it manage its cost base given it’s now half the size? It all depends on the people running it.”
A source close to the company said the product lacked clarity: “The wholesale business was off-sync to the rest of the business. The retail and wholesale collections were aimed at different buyers. It was trying a bit of everything and you can’t do that. You’ve got to be more focused.”
Administrators sold five stores and certain stock assets to Aligro UK, which was established on 4 June. Aligro UK is run by Swedish investor Jonas Erik Andersson and is a subsidiary of Aligro Group, which was incorporated on 24 April.
One source said with a private equity cash injection and a clear, focused strategy Henri Lloyd could have longevity: “The brand is strong and well known. I think they’ll probably take it more upmarket, like another Fred Perry. They had a very vibrant business with the sailing [product].”
Henri Lloyd is best known for its sailing and waterproof clothing, and independent retail analyst Nick Bubb said focusing on the brand’s roots could ensure its future: “It sounds like it’s going back to its nautical roots, if it’s keeping [stores in] the likes of Salcombe, Dartmouth and Cowes and dumping most of the rest, including all the House of Fraser concessions. [But] 172 jobs down to 44 is a big reduction!”
Hyman added: “The brands that are really strong are the ones that have kept to what they’re really good at. But, if they are going back to basics, how much of the original Henri Lloyd brand equity is still there? It is quite difficult to calibrate.”
The Drapers Verdict
Going back to basics could be a clever strategy for Henri Lloyd. With a strong handwriting and brand DNA, it made its name as an innovator in water-resistant clothing designed for sailing. In a retail market as tough as we’re seeing in the UK, now more than ever brands need to differentiate to survive. A focused strategy, leaner business and clear customer target market could be just the competitive advantage it needs to turn the ship around.