The troubled fashion retailer New Look has confirmed store closures could be on the cards as the new management team battles to arrest falling sales.
The New Look executive chairman, Alistair McGeorge, said the private equity-backed retailer was weighing up a restructuring process known as a company voluntary arrangement (CVA), which is used by struggling retailers to close loss-making stores or agree rent reductions with landlords.
“A CVA is one of the options we are looking at,” said McGeorge, who said he had also identified £25m of cost-savings at the business since he returned to the helm in November after a four-year absence.
New Look has 594 UK stores with about 60, or 10% of the total, thought to be at risk of closure.
McGeorge was parachuted in to lead the retailer, where sales and profits have collapsed, after the previous management team led by Anders Kristiansen pushed up prices and started selling clothes that were “too young and edgy … We were selling clothes at the wrong price aimed at the wrong people.”
Sales for the 39 weeks to 23 December dropped 6.3% to £1.1bn, resulting in a pre-tax loss of £123.5m. In the UK like-for-like sales fell 10.7% over the same period.
Last month it emerged that some of New Look’s suppliers had had their cover pulled by the insurer Euler Hermes after it took a dim view of the chain’s precarious finances. Credit insurance protects suppliers during the period between an order being accepted and payment.
New Look was acquired by the South African private equity firm Brait for £780m in 2015. The retailer is saddled with a £1.2bn debt mountain, but the company said it was not seeking to restructure its loans.
McGeorge rejoined New Look following the abrupt departure of Kristiansen in September, while Tom Singh, who founded the chain, has also returned to a hands-on role.