Why has Aquascutum failed?

18th April 2012

The question of why Aquascutum failed when other British heritage brands have succeeded is a complicated and many layered one.

First all retail businesses and especially European ones are operating in a harsh economic climate. Aquascutum was no different. Second the fortunes of both Aquascutum, and sister company Jaeger have been tied together since 2009, when Aquascutum was bought by rag trader Harold Tillman. Tillman, a serious player in his own right who chairs the British Fashion Council has owned Jaegar since 2003 and certainly at one stage was thought to have turned the Jaeger brand around himself.

However, this week Jaeger was sold to private equity baron Jon Moulton's turnaround firm Better Capital for £20m most of which is being used to pay off debts to the Royal Bank of Scotland as the Guardian reports here. Aquascutum was not part of that deal.  

That suggests another layer to the story – that the businesses which face a combination of difficult markets and high debt levels are particularly vulnerable. Also businesses and entrepreneurs are often tempted to borrow in a downturn in the belief that they can position themselves for recovery. In this case, that recovery or certainly a strong one has been a long time coming which might strain anyone's cash reserves.

Of course, Aquascutum faced another hurdle when seeking a buyer – it did not own all the intellectual rights to the brand. The Asian rights were owned by Hong Kong based YGM trading, which might put off many a buyer, given that it could not benefit fully from any Asian expansion – an obvious growth markets for any UK heritage brand.

Here the Independent contrasts Aquascutum with Burberry.

In the last decade, Burberry has moved to shed its image as a favourite brand of football casuals with ads featuring stars such as actors Eddy Redmayne and Emma Watson. It also massively stepped up its social media marketing. 

However journalist Harriet Walker says the key to success is down to its chief creative officer Christopher Bailey, who understood "the way to treat a "heritage label" is to reinvent that heritage for a new generation.

The brand did this subtly at first. Among other things it dropped the famous checks from the catwalk lines but not the standard issue scarves and handbags for what she calls ‘aspirational shoppers'.

"Burberry's public face became at once cool and cult, losing none of the prestige that comes of being something of an institution," she writes.

Praise indeed. This contrasts with Aquascutum, which she believes did not embrace change but relied on its existing image without reinvention.

She adds: "Where Burberry made its tradition relevant to a new audience, Aquascutum has not – the trick is to grow alongside your customers, rather than hanging in there until they die off."

Yet perhaps this is a little harsh. Arguably the key question has been the mixed ownership not the creative direction.

Reuters is now suggesting that YGM trading may buy the whole firm.

It quotes chairman Peter Chan saying: "The Board considers that the possible insolvency of Aquascutum Limited may present an opportunity for the company to further expand its ownership on the Aquascutum brand worldwide," from a filing to the Hong Kong stock exchange late on Tuesday.

One issue of potential interest is whether Aquascutum would be a retail stock of the sort generally out of favour with analysts and investors or could it become a retail stock with a bit of a luxury feel, a profile more in favour with analysts and investors.

Certainly were ownership to be united, then perhaps that might make it a more compelling proposition and give it a better base for a Burberry-like expansion.

However, at the moment is looks most likely that whatever sort of stock it would be, it would be an Asian-owned British heritage brand.


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