- Republic is a fashion retailer targeting 16-25 year olds – this target market has the highest unemployment for any age group, resulting in lower personal disposal income (PDI) which has impacted sales.
- 121 stores with 1000 employees predominately across the North of England – many areas in the North of England have been badly affected by the recession, with the target market of 16-25 year olds, this has had a double impact on Republic. Sales have declined by 2.3 per cent to £177m in the year to January 2012 and pre-tax profit slumped from £27.3m to £3.2m.
- Owned by US private equity firm TPG – TPG paid £300m in 2010 with the intent of doubling the estate to over 200 stores. They brought in former TK Maxx CEO Paul Sweetenham and former Mango buying director Melissa McDermott.
- TPG had recognised the retailers need to capitalise on an omni-channel approach and had committed to an investment of £7m in the IT infrastructure.
- There has been criticism that TPG has distributed a total of £37m in dividends over the past couple of years, however retained earnings were left in the business.
- Rationalising the estate – there are rumours that KPMG had been appointed to assist with disposing of the loss making stores.
So based on the above situation, we have listed some basic questions for you:-
- Is your product offering of interest (relevant and affordable) to your target market?
- Are you tracking your sales, costs and profits for each store?
- Can you rationalise your cost base?
- Is your dividend and remuneration policies aligned with the economic conditions?
- Are you utilising all the channels available to make it easy for your customers to buy from you while accessing other markets? M-commerce, E-commerce, social, high street?
Let us know what you think, what are your thoughts about Republic?