Not a good look for New Look as shutters go up and jobs axed
Comment Martin Flanagan
The retail sector won’t forget the start to 2018 in a hurry. Toys R Us and electronics group Maplin had collapsed into administration and Carpetright had put out two profit warnings since Christmas.
Now fashion retailer New Look is in the firing line. The group, pushed into and pushing ahead with a company voluntary arrangement (CVAS always being a tangible sign of serious trading troubles), is shutting 60 UK stores, including eight in Scotland, which is nearly one in ten of its UK estate.
That puts the sword of Damocles over nearly 1,000 New Look jobs, as the beleaguered retailer will also ask landlords to slash the rents and revise leases on nearly 400 of its stores across the UK.
New Look is paying the price of having too many leaseholds and not enough freeholds in its estate, giving it a high fixed costbase as weaker consumer sentiment and digitally-driven systemic change has compromised many retailers.
Of course, there is always some brinkmanship involved with CVAS because of the danger of creditors playing hardball and being left with next to nothing from a failed company. Even so, New Look is now in limbo until creditors vote on the CVA blueprint on 21 March. Trying times for it, and also a sizeable slug of the high street. It is enough to make a millennial moan. The Office for National Statistics says that total pension liabilities in the UK – state pensions, public sector pensions, company and private pensions, the whole caboodle – surged by more than £1 trillion to £7.6tn between 2010 and 2015.
Worse, according to Steve Webb, director of policy at Royal London, is that while today’s population is on a £7.6tn pension promise, it has only set aside about a third of that to pay for them.
“The rest will have to be financed by tomorrow’s workers,” Webb says. He says that if we are to have a meaningful debate “about how we pay for an ageing population and about fairness between generations” then starkly astronomical figures like these need to be published regularly and should inform policymaking in Holyrood and Westminster.
As of the minute, older workers are in a sort of the-pension’s-in-the-post situation. Hardly reassuring for them or the millennials.