River Island shuns dividend to expand online service

River Island grew sales last year as it invested in boosting its online capabilities
River Island grew sales last year as it invested in boosting its online capabilities

The family owners of River Island have shunned a dividend for the second year in a row in favour of pumping money into boosting its online shopping services at the same time as opening new stores.  

Ben Lewis, chief executive, said that the retailer was planning to double the size of its digital office in Shoreditch, east London, and treble its technology team from the current 100 staff dedicated to working on boosting River Island’s online capabilities.

"2016 was a year of heavy investment for the business as we focused on River Island's technology, which is very important to our strategy, investing and expanding our product ranges and investing in people," said Mr Lewis.

The retail boss, whose uncle Bernard Lewis started the retailer five decades ago, said the company had partnered with Google's location services which allowed shoppers to check the stores nearest them if they had their desired dress or top in stock in their size.

He also said that River Island was working to implement artificial research and machine learning to become more responsive to online shoppers' needs and making supply chain improvements to ensure there was a more seamless shopping experience for customers who drifted between stores and their screens.

Mr Lewis said that both online and mobile sales had grown by 21pc last year, helping to lift total sales 3.5pc to £970m in the year to December 31. 

River Island has expanded its fashion collections to include plus-sized, petite and activewear ranges
River Island has expanded its fashion collections to include plus-sized, petite and activewear ranges

The privately-owned company is expected to report that operating profits have fallen 7pc from £145.8m to £135.7m after focusing on investing in technology, opening new stores and expanding its range of childrens and plus-sized fashion. Profits on ordinary activities before exceptionals are expected to come to £124.5m.

The Lewis family, of which there are three family members on the board including Mr Lewis, paid itself £180m in 2013 and 2014 but has chosen not to take a dividend for 2015 or 2016.

Mr Lewis said that the family had “continued to invest in the business.”

“We are a healthy business in terms of our profits and cash flow and we believe in investing in the opportunities for River Island to ensure there is a sustainable future for the long term.”

The retail boss said that “against a challenging backdrop, the last 12 months have seen stable trading”. Mr Lewis said that sales of its swimwear had been particularly strong last year, selling enough bikinis to dress all the British women holidaying in Ibiza every minute during the summer months.

Last year, River Island opened 14 new stores and has plans for a further five new shops this year, underlining the company’s belief in the role of stores despite the rise of online shopping.

“We are well positioned to deliver further progress against our strategic goals and remain confident that we are building the right store portfolio, product and digital capability as we continue to invest for growth”, Mr Lewis said.

License this content