Loss-making New Look considering store closures

NEW Look is considering closing a number of stores.

The struggling fashion chain posted another set of dismal figures and is understood to looking at the possibility of a range of options aimed at improving its performance, which includes store closures.

House of Fraser has seen a leading credit insurer stop offering cover to some of its suppliers. The loss of cover in this manner was a feature in the eventual demise of Woolworths, Comet and BHS.

New Look, owned by South African investment group Brait, posted a pre-tax loss of £123.5m in the three quarters to December, while sales slumped 6.3% to £1bn.

The high-street chain booked an underlying operating loss of £5.1m, which compares to a £111.5m profit in the same period last year. Like-for-like sales in the UK plunged 10.7% during the period, while online sales through New Look’s website fell 15%.

Alistair McGeorge, who has been parachuted into the role of executive chairman for another stint at New Look, said the poor showing reflected a challenging market and heavy discounting.

New Look, which has 594 stores in the UK, and more than 30 across Wales, is thought to be mulling plans for a Company Voluntary Arrangement (CVA), which would put it on a firmer financial footing by allowing it to shut lossmaking outlets and secure rental reductions.

Around 60 stores, or 10% of the store estate, are thought to be at risk of closure.

Mr McGeorge said: “I am confident that we are now making the necessary changes to get the company back on track and we continue to have sufficient liquidity to deliver our plans.

“In particular, we are focusing on reducing costs, recovering the broad appeal of our product and reconnecting with our customers.

“We are already realigning our pricing to offer significantly better value, adding flexibility to our buying model, and improving our speed to market.

The group is also struggling under £1.2bn of borrowings but is not seeking a debt restructuring.

Mr McGeorge returned to the firm following the abrupt departure of chief executive Anders Kristiansen in September.

Retailers across the board have been stung by rising costs and falling consumer confidence as Brexit-fuelled inflation hits the sector hard.

House of Fraser is facing uncertainty after a leading credit insurer stopped offering cover to some of its suppliers.

House of Fraser now faces a cash squeeze after a leading credit insurer said it would no longer protect some of the firms which fill the shelves with goods.