One of the biggest privately-owned retailers in Britain, River Island, is doing all the right things to steer itself back on course, according to retail analysts.

The clothing chain, the third largest privately owned retailer in this country after Littlewoods and Harrods, is yet another victim of the middle market malaise. River Island's latest report and accounts reveals a 30 per cent fall in pre-tax profits for the 52 weeks to December 25, 1999. The profit and loss account includes a hefty charge for shopfitting assets disposed of during the year.

But the company, owned by the Lewis family, has received a pat on the back for spending this money enlarging and refurbishing its 200 shops.

Hayley Myers, a retail analyst with Retail Intelligence, said: "Keeping stores looking good and inviting is fundamental to attracting more customers and a key strategy for moving forward. Linking up with a partner in terms of branded goods such as offering Levi jeans for sale is another good move. It gives the store a certain cachet, bringing new people in.

"Other ideas are broadening ranges on offer such as luggage and accessories. This can have a double-edged sword effect though," she added.

"Diversifying is good when you are doing well but staying with your niche market and continuing to do what you know and do well may be better when times are tough."

Promotions and advertising could be another tonic to cure the high street malaise, says Ms Myers, even though it means spending money to get more customers through the doors.

And she offered one final piece of advice to beat the middle market blues - look at what similar stores are doing in other parts of Europe.

"Spanish stores selling young fashion such as Zara and Mango are vertically integrated and have a quick stock turnover, offering new looks every week or fortnight. This is very appealing because their customers will visit the store more often, knowing there is a chance there might be something new in that week that they want to buy. Stores like New Look are already doing this here."

Clive Lewis, chief executive of River Island, has pledged that the company will continue fighting its corner in the middle market.

He said: "It is a long-term business and we must continue to do what we set out to do, which is provide good fashion and good value in the high street."

By Deborah Bowyer