Austin Reed: Time for smart thinking

Last week, the clothier’s shares rose 15% to 135p after it confirmed it had received a bid for ‘the whole of the issued share capital’.

Analysts believe the bidder is former Queens Park Rangers chairman Richard Thomson, who last year bought Jaeger and Viyella.

Like most other men’s clothing retailers, Austin Reed has suffered from reduced consumer spending over the past year. And this is certain to be a worry for the FD as he adds up turnover figures.

In January, the company warned that its total sales were down 2.5% after poor Christmas trading, and it added that its 2002 profits would be below expectations. Shares fell 18% to 102p on the news.

Its news mid-year was no better. Austin Reed’s shares plunged in September as it announced a cautious outlook for the year because of poor consumer spending.

Although for the half-year to 10 August the company unveiled pre-tax profits of £2.7m, up 8% on the previous year, and said sales were up 3%, the group also said overall sales in the first five weeks of the second half were down 11%.

‘We are cautious on the outlook for consumer spending in our market sectors over the coming months and as a consequence we have implemented a stronger promotional programme to stimulate sales,’ a company statement said.

Chief executive Roger Jennings explained: ‘It’s difficult to judge how much of it is down to market factors – but we are cautious. After a performance like that we have to be.’

Best known for its suit and formal wear, Austin Reed launched a new skiwear range in the autumn, following on from the successful golf clothing line it launched last spring.

It also said it planned to introduce a new fragrance range for men and women and last month announced a six-year licensing agreement with European Designer Productions to manufacture it.

While promotions and sales are a focus, Gibson will also want to make sure that costs for the refurbishment of Austin Reed’s flagship Regent Street store stay on schedule and that that the work is completed to its mid-2003 deadline.

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