Profits up 50% and sales soar as private fashion retailer turns up the heat on rivals

Fashion retailer River Island produced an industry-beating performance last year, driving profits up by more than£40 million to over£120 million.

Retail Week has learnt that the retailer’s sales increased more than 20 per cent for the year ending December 31. Like-for-like sales are believed to have surged by 15 per cent as River Island put pressure on mid-market fashion players such as Next.

The results confirm River Island’s status as one of the very top UK fashion retailers.

River Island is due to file its accounts at Companies House by the end of October and refused to comment on the figures or its recent performance. However, speaking at the Retail Week Conference last week, River Island chief executive Clive Lewis said the retailer differentiated itself from its competitors through its 70-strong, in-house design team.

‘For us, design is really key. Design is very high up in the values chain and we invest heavily in our stores,’ he said.

Lewis said that its efforts in design meant the retailer could compete on more than just price. ‘We are in a very competitive environment, but better value doesn’t mean cheaper. We are in a category that is known as masstige - it’s quality for everyone,’ said Lewis.

Sales at River Island are rare, illustrating that stock markdown is also being well controlled. The retailer is building larger stores and continually evolving its store design through its relationship with Dalziel + Pow. Its latest store format, which won the retailer Store Design of the Year at last week’s Retail Week Awards, opened at Bluewater in Kent last autumn.

Retail Knowledge Bank senior partner Robert Clark said: ‘That’s a remarkable performance from River Island. I think they have eaten into Next, which has had a few problems. But Next always manages to put things right again quickly.’

Clark added that River Island’s performance was driven by a combination of management and flair on the buying side. ‘River Island has ploughed its own very good furrow, which is what you have to do in fashion retail. Management has redoubled its efforts in the past couple of years and have got the right formula,’ he said.

Next was poised to reveal full-year figures as Retail Week went to press, providing a snapshot of the trading environment for clothing stores. Brokers expect profits of between£435 million and£450 million.