LONDON — The British high street is looking more and more like a graveyard with a second heritage retailer, men’s wear brand Austin Reed, collapsing into administration just 24 hours after British Home Stores did the same.
Austin Reed, which was founded in 1900, had already been undergoing a turnaround at the hands of distressed retail specialists Alteri Investors. Alteri had recently taken a stake in the company after advising on its turnaround. The fall into administration, Britain’s equivalent of Chapter 11, leaves 1,184 jobs at risk.
The retail brand that decades ago stood shoulder-to-shoulder with British men’s wear greats such as Burberry, Aquascutum and Daks fell victim to a combination of fast-changing consumer habits, the shift to omnichannel retailing and an overarching crisis in the formal suiting arena that has seen men favor fashion-forward, sportier shapes and trans-seasonal fabrics over traditional, tailored investment pieces.
On Tuesday, administrators from Alix Partners, the international business advisory firm, said they were called in by Austin Reed’s directors due to “cash flow difficulties arising from challenging retail market conditions.”
The administrators confirmed that Austin Reed would continue to trade while Alix explores “all possible options” for its future, including a sale of all or parts of the business.
“Our priority now is to work with all stakeholders and determine the optimum route forward for the business,” said Peter Saville, a joint administrator. “Austin Reed is a well-regarded and iconic brand and therefore we are confident that it is an attractive proposition for a range of potential buyers.”
Austin Reed has 100 standalone stores and 50 concessions throughout the U.K. and Ireland. As part of a turnaround plan set by Alteri, the company had closed about 15 percent of its stores over the past year.
Founded by Austin Leonard Reed, the group began making made-to-measure clothing and later moved into men’s ready-to-wear. Austin Reed also owns the women’s wear labels Viyella and Country Casuals, which will be sold along with the rest of the group.
The flagship at 100 Regent Street features a dedicated casualwear floor, a 60-foot wall of shirts and two floors of tailoring, including made-to-measure and bespoke suits. It also sells through more than 1,000 retail outlets worldwide, and has nearly 30 wholesale clients in the U.S. alone. The now-defunct Hartmarx Corp. held the U.S. license for the English label for more than 30 years, producing both men’s and women’s wear.
According to the latest accounts filed at Companies House, the official registry of U.K. businesses, Austin Reed had a profit of 1.8 million pounds, or $3 million, in the year ended Jan. 31, 2015.
Turnover in the period was 44.4 million pounds, or $72.8 million. All figures have been converted at current exchange for the periods to which they refer.
Austin Reed had been battling a series of headwinds and industry observers inevitably drew parallels between its demise and that of BHS, the general merchandise retailer that ultimately folded after failing to find the funding for its day-to-day operations.
Other problems persist: The U.K. pensions regulator is now looking at whether the former owner of BHS, Sir Philip Green and the current owners should be forced to put more money into the retailer’s pension fund which, as reported, is suffering from a 571 million pound, or $822 million deficit.
“Two iconic British high street brands heading for administration in two consecutive days feels like a hammer blow for the high street as 204 years of combined retailing history face being wiped out,” Simon Cope-Thompson, partner at Livingstone Partners, told WWD. “Like BHS, Austin Reed has struggled to keep pace with a fast-paced, highly competitive market increasingly dominated by online retailers. By failing to embrace digital and modernize its stock range, Austin Reed has hemorrhaged market share to more nimbler rivals.”
Cope-Thompson, however, believes Austin Reed could live again: “It is a well-known brand with potential for rejuvenation via transformation. The administration may of course result in the emergence of a restructured/streamlined group owned by Alteri Investors. All refinancing options must be rapidly considered by Austin Reed’s management and its key stakeholders.”
Austin Reed had other problems on its hands, including a waning appetite for traditional tailored men’s clothing and the rise of contemporary and trans-seasonal collections. Major British department stores have also seen their tailored and formal offers suffer, as have brands including Hugo Boss, Brioni and Burberry. In its first-half trading statement issued last November, Burberry said that sales of women’s and men’s wear were flat in the six-month period, with men’s sales dipping 1 percent on an underlying basis.
London’s specialty and department stores, meanwhile, are rapidly changing the way they buy to accommodate the needs of the consumer. Harrods is increasingly tailoring its offer to match its male customers’ buy-now-wear-now demands, with visual merchandising and mannequin styling changed on a daily basis. Liberty’s fashion buying and merchandising director Scott Tepper said his store has been seeing “a very distinct change in our customers’ shopping patterns” and therefore decided to take some calculated buying risks to reflect them.
“We’ve learned there is a substantial customer block that wants newness in everything, from overcoats to chunky knits to cold-weather accessories when the weather warrants them — and not before — but he’s also bored by carryover fall styles,” said Tepper.