Struggling retailer Austin Reed Group is expected to see some “green shoots” soon as it focuses on a turnaround, according to an analyst.
It has been a tough start to the year for the privately-owned fashion retailer Austin Reed. After revealing in January it was closing 31 stores and getting £3m from shareholders as part of a deal with creditors to rescue the company , the firm yesterday announced it had secured an unspecified three-year loan from investment group Alteri.
The fashion retail group, which incorporates Austin Reed, CC and Viyella, has agreed the financing to help fund stock as well as the group’s investments into multichannel.
Retail Week understands that in a worst case scenario, if Austin Reed is unable to repay the loan, Alteri will gain control of the business.
Conlumino analyst Anusha Couttigane, said the latest loan is a risky move. “Since the dire situation that Austin Reed is in means the only form of security it can offer is the company itself,” she said.
“However, the fact that Alteri has consented to a loan on these terms suggests that the company still has some legs – few investment firms would agree to accept a failing company as security unless it was sure of the risks and certain that there still remain some tangible assets within the business.”
The loan will also allow the retailer to invest further into multichannel. “Online investments see much faster traction than physical expansion and product development,” she explained. “If Austin Reed can get the sales mix right, and deliver on-point service, it shouldn’t be too long before it starts to see some green shoots. Yet the process is as much about rebuilding the brand as it is about rebuilding the organisational structure of the business.”
In fact the retailer has today announced it has restructured its ecommerce website. Working with managed services provider and systems integrator Tryzens, Austin Reed has moved off its website platform which was not optimised for mobile sales and onto IBM WebSphere Commerce.
Couttigane said that in order to rebuild the brand, Austin Reed will need to ensure its continued online investments result in compelling customer experience and a superior brand experience – “one which speaks to the reputation the iconic brand has held in the past as a royal purveyor.”