New Look boss admits to ‘difficult’ period as both sales and earnings take a tumble

HIGH STREET chain New Look has revealed tumbling sales and earnings in a “difficult” market and warned trading would remain under pressure into 2018.

The fashion retailer posted a 60.3 per cent plunge in underlying operating profits to £12.1m for its first quarter to June 24 after UK like-for-like sales slumped 7.5 per cent.

On a bottom line basis, the group fell into the red with losses after tax of £15.2m against profits of £5.8m a year earlier.

It blamed tough conditions on the high street, but its ranges have also missed the mark in recent months. Chief executive Anders Kristiansen said: “As expected, the UK market has remained difficult, which has resulted in a disappointing quarter of trading.”

He added: “We expect the consumer economy to remain fragile and challenging market conditions to persist into 2018.

The group is overhauling its clothing ranges, hiring new chief creative officer Paula Dumont Lopez, who is due to start in September.

It is also reducing its “dependence” on the UK high street and Mr Kristiansen said the group is “confident that we will see improvements, but expect these to take time”.

The group saw website sales also fall in the quarter, down 0.6 per cent, while overall brand sales dropped 8.2 per cent.

New Look, owned by South African investment group Brait, has 890 stores, including 593 in the UK and a further 297 globally.

Mr Kristiansen said the group’s store product is “not where it should be”, which has compounded the hit to consumer confidence from Brexit and impact of the weak pound.

He said: “It has been tough out there for most companies and that’s what we have seen ever since Brexit but on the other hand we don’t think we have delivered as good a product as we could have.”

The pound’s plunge since the Brexit vote has also hit its profits, as New Look has cut prices on its key lines while seeing its buying costs soar.

Mr Kristiansen said he hoped the arrival of Ms Dumont Lopez, who has held senior roles at Zara owner Inditex and Esprit, would help spur on the chain’s turnaround.