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Mixed week for UK fashion retailers

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This week has seen strong public focus on top-end fashion brands as the world’s leading designers showcased their talents during London Fashion Week.

Consumers are likely to hit the shops as imitation offerings fly into stores, as high-end retailers capitalise on recent news which revealed that the average shopper increased their spending on luxury items by a staggering 27 per cent compared to last year.

Mid-market retailers have, however, announced mixed results this week, with Spanish fashion retailer Inditex Group, owner of Zara and Bershka, reporting a net sales rise of 12 per cent to €6.2 billion (£5.4 billion) in the first half of 2011.

River Island meanwhile, yesterday posted disappointing results for the year to December 25th 2010, as turnover stood at £802.2 million, a drop of £24.2 million compared to the same period in 2009.

Gross operating profit (GOP) had improved by 11 per cent on last year for Inditex, standing at €3.6 billion, while River Island saw a decrease of £14 million to £161.2 million.

River Island CEO Ben Lewis remained positive about the performance of his company, but pointed out that the company is cautious as the economy continues to struggle.

“2010 was a difficult year for the UK high street and River Island held up well against this backdrop,” he said.

“We focused on providing good value for our customers by broadening our offering and remaining competitive on pricing, whilst growing the store network in the UK and internationally.”

While both companies have excelled in their multichannel offerings, it appears that international growth is driving sales at the Spanish-based retailer.

Inditex has this month launched products online across the whole group, as Pull & Bear, Bershka, Massimo Dutti and others followed Zara in launching transactional European websites.

River Island has maintained an online presence for much of the past decade, and provided an award-winning online recruitment concept earlier this year.

However, Inditex opened 177 stores during the first six months of 2011, bringing the total across its 78 markets to 5,221. River Island, which claims to focus on continued expansion as it seeks to add to its store portfolio, opened just six stores during 2010, including in the Middle East and Europe.

Priorities will inevitably differ between the two retailers, although both have taken significant steps towards boosting sales and profit growth thanks to openings of respective stores in Westfield Stratford City.

The highly-anticipated east London retail hub, which opened its doors last week, signed a 36,000 sq ft deal with Inditex to open stores for Zara, Pull & Bear and Bershka. In a UK first, Zara offers a new concept incorporating clean lines to the interior and exterior design of the shop, bringing a more modern, cubic appearance to the space.

River Island has also experimented with its retail concept at the new Westfield, providing a more rustic feel to its store, as well as digital and other design concepts. These include a new VIP department with a mirrored wall, illuminated billboards on the front of the store and a quilted ceiling, while video screens are also on display in the space.

Despite their differing results, both companies will be hoping that these new offerings will increase customer interest in their brands and improve their standing as multi-platform, modern fashion retailers.

Indeed, Lewis feels that maintaining focus on customers is key to River Island’s future growth.

“At the heart of the River Island brand is passion for retail, our people and providing innovative product,” he commented.

Published on Friday 23 September by Editorial Assistant

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