Investment dents River Island profits, online shift hits sales
today Sep 19, 2019
River Island has reported declining profits for its 2018 financial year with operating profit down to £35 million from £80 million a year earlier. Revenues dropped too, falling by £25 million to £919 million.
But the company is confident about its prospects, despite the tough market, and part of its profit decline was caused by investment for the future.
Outgoing CEO Ben Lewis said the company believes in the future of the store and is investing in physical spaces to make them suitable for an omnichannel world with a mix of new openings, upgrades and enlargements.
The company has 300 stores altogether, 270 of them in the troubled UK market, but it still has plans to add to that total, although it wants to ensure that it gets good rent deals, both for its new spaces and any legacy leases.
Profits were also dented by higher business rates and the need to put cash into the business, but what caused the sales decline? Lewis cited the fact that shoppers are moving online, although he didn’t elaborate on that.
But at least the company is seeing growth online itself, as well as growth through its wholesale partners.
However, Lewis also said the firm isn’t seeing any change in the tough conditions in the market and that fashion retailers will continue to be squeezed for the foreseeable future.
Lewis, who’s the nephew of the firm’s founder, will step down at the end of the month as ex-Wiggle and White Company exec Will Kernan takes over. However, he will remain on the board.
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