Aurora Fashions has announced that it is currently negotiating with landlords in an attempt to reduce the cost of renting stores to house its subsidiary chains. The group, which owns brands such as Oasis, Coast and Warehouse, has warned that if no deal can be agreed then they will have no choice but to scale back the number of shops they occupy.
Chief Finance Officer, Richard Granville, has already confirmed that the group’s commercial property presence will diminish as it attempts to meet a 25 per cent reduction target in its store network over the next few years.
The business will instead focus on online sales and building a more prominent digital presence, as well as continuing restructuring works which have already begun.
Mr Granville explained; “We are seeking rent reductions and, if these cannot be attained, then we will pull out of stores.
“Fashion retailing is increasingly going online and times are extremely tough for bricks-and-mortar operators.
“We are reviewing our entire store portfolio and are in daily discussions with landlords.”
A large part of the restructuring scheme involves the demerging of its three primary brands. While Oasis and Warehouse will come together under a new parent company known as “Fresh Channel”, Coast will become a standalone business – although it has not yet been confirmed whether this business will be primarily online or in-store, nor if existing concessionary agreements with department stores such as John Lewis and Debenhams will remain in place.
This move could be seen as a proactive move for a savvy business looking to stay ahead of the trend in a struggling retail industry, yet rumours are circulating that it has in fact caused the need to downsize the property portfolio. According to The Sunday Express, some of the group’s credit insurers are now closely monitoring the situation as they have expressed concern over the resilience of Aurora Fashion’s brands in an increasingly difficult clothing market.
Mr Granville admitted that the group has encountered difficulties when dealing with credit insurers recently, yet points out that a strong bond with suppliers means shortages of stock are highly unlikely.
He continued; “Credit insurers are reducing their exposure to the retail market generally and we are no exception.
“However, we have very longstanding relationships with a limited number of suppliers and have not experienced nor anticipate experiencing any issues in our supply chain.”
With the retail industry making tentative steps towards growth after several years of difficulties, the retreat of these three popular designer brands from the high street could hugely affect surrounding stores and the communities they serve. However, should rent costs remain at the current levels, Aurora Fashions risks the demise of Warehouse, Oasis and Coast entirely.
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