River Island results disappoint
A rather disappointing set of River Island results just revealed show sales effectively flat year-on-year.
Total sales for 2015 rose by just £1.1 million to £932.7 million and operating profit decreased by £800,000 to £145.8 million, according to documents filed by the family-owned business with the Companies Office.
The midmarket retailer, which has 292 stores in the UK and Ireland, made significant investment across its proposition on product ranges, technology and multichannel operations – though this has yet to bear fruit.
In its current financial year, River Island has made more tangible changes to its product offer with the launch of its activewear and plus sizes ranges – with both performing strongly. Extending its reach among niche consumer groups and seizing opportunities in the lucrative athleisure market will help to bolster sales amid difficult trading conditions.
With menswear forecast to outperform womenswear over the next five years, River Island has opted to invest in its offer and enhance the team with the appointment of a new head of menswear buying and a menswear design manager. There remains tough competition on the high street in the form of H&M, Topman and New Look – which continue to roll out standalone menswear stores – so building destination appeal for River Island’s menswear offer both instore and online will be crucial to achieve market share growth in 2016.
River Island is rightfully cautious of the outlook for the rest of 2016. With the weather playing havoc with trading, fragile consumer confidence and squeezed disposable incomes restricting discretionary spending, selling product at full price is a challenge.
Transitional ranges will be key in the fourth quarter; likewise providing shoppers with a reason to buy at full price in terms of quality, fit and design will be important if River Island is to avoid resorting to discounting to drive sales.
- Kate Ormrod is a senior analyst with Verdict Retail.