As Edinburgh Woollen Mill Group marks the anniversary of the administration of value fashion chain Peacocks out of administration, chief executive Philip Day tells Retail Week how he is turning the business around.
What initiatives have you implemented at Peacocks since you took it over a year ago?
Philip Day: We’ve developed the products for the future. We have realigned the demographic with beautiful basics and we’ve added value, using the best raw materials. The customer has loved it and they have come back in volume.
We have reduced the fast fashion element and reduced markdowns by 50%, so the first price is the right price. We have solid price points now that are not changing every five minutes. The core price stays the same all the time and it has worked phenomenally well.
We have concentrated on getting business built for the long term rather than the short term.
Are the improvements carrying through to the numbers?
Margins are better. They’ve improved nine percentage points and we are managing to offer cheaper prices.
We now have a positive balance sheet for the first time in six or seven years and we are not fazed by issue on credit terms. Peacocks couldn’t get credit before but it can now.
Fundamentally, it’s about product.
How has sentiment within the business changed at Peacocks?
Before, everyone was living under a mushroom of debt and the balance sheet was shot to pieces. Now we’ve bought the head office building in Cardiff, we’ve got a fantastically-positive balance sheet and we’re investing in people, stock and the future. We’ve streamlined departments too and put money into stores.
The teams in our shops have been utterly fantastic and on the whole very supportive.
What are your plans for stores?
We now have over 450 stores and we are looking at opening another 35 stores.
We would like to have 800 stores in total, with 600 in the UK and 200 overseas.
For overseas stores, we are targeting Germany and we have had approaches from the Middle East and Russia. We are going to take it slowly. We want to focus on the UK first.
I think we will have the first overseas stores open in the back-end of this year and we are looking at signing up a new partner and relaunching in the Middle East.
In Germany, we want to trial five stores this year. We feel the country is similar to the UK at the discount mid-market and upper market. We feel we fit well in their mid-market and it’s not too difficult to line-up the distribution chain.
You relaunched the website before Christmas, how has it been trading?
The website is already receiving the same level of hits as when it closed early last year. Basket size has gone up 15% since before we bought the business.
Historically, the basket value was £30 and has now grown to £42.
I think customers see it as an improved Peacocks. Prices got too high before and so volumes went down.
In addition, they had no footfall counters in the business before. Now we’ve put them in stores. But we can see that by the volume of people buying and the increase in basket size, it implies footfall is up.
Will you be adding any new categories in store?
We are thinking about introducing homewares in Peacocks stores. We own soft furnishings retailer Ponden so we have the ability to buy the right product. We’re going to introduce homewares to 30 Peacocks stores this year.
In addition, we see kids as a massive opportunity to develop as a standalone brand. We have been approached by two main department stores about putting a kids range in for them and we will open some concessions in the next year. It could be very big. I think Peacocks Kids has got a long way to run.
Will your clothing agreement with Morrisons continue?
We still offer ladieswear through Morrisons but kids is coming to an end in the early part of this year.