High street woes see New Look swing to £74m FY loss

● Results follow March unveiling of restructuring plan ● But rival Boohoo sees sales increase 53% in first quarter

Challenged fashion chain New Look has swung to a full-year loss amid plunging sales on the high street.

The retailer has suffered in part from the rise of online operators, and, demonstrating such contrasting fortunes, digital rival Boohoo has reported soaring sales in the first quarter as it pushed ahead with its ambitious expansion plans.

New Look, which in March launched a restructuring plan, ran up an operating loss of £74.3 million for the year to 24 March, swinging from profit of £97.6m in the previous year.

Sales in the UK fell by 11.7 per cent on a like-for-like basis, accelerating from a decline of 6.8 per cent the year before. Website sales slumped by just under a fifth, while total revenue came in at £1.34 billion, down from £1.45bn 12 months previously.

In a bid to lure back customers, New Look’s executive chairman Alistair Mcgeorge is lowering prices. “Quite frankly, we have disappointed some of our best customers,” he said. “It is interesting what happened. We had lost our prices. We had put our prices up, all we have done now is to put it back to where it should be. It didn’t work, it was never going to work.”

The business was hit with a £34.2m one-off cost, which included an exceptional charge from stock clearances.

When it launched a restructuring plan earlier this year the retailer said it would shut 60 stores as part of a Company Voluntary Agreement (CVA), affecting 980 jobs. The company said yesterday that the CVA would allow it to save £40m.

Mcgeorge said: “At the end of the day, for a business to survive it has to have a good brand and be run properly. A CVA alone is not going to save a business.”

The retailer’s poor trading news comes after House of Fraser proposed a CVA, saying it was to shut 31 stores, putting 6,000 jobs at risk. Mothercare and Carpetright have also undertaken CVAS so far this year to save on costs.

But online fashion retailer Boohoo painted a more positive picture, with a 53 per cent year-on-year rise in group sales to £183.6m in the three months to 31 May.

The Boohoo brand brought in £97.2m, while Pretty Little Thing and Nasty Gal delivered £79.2m and £7.2m respectively. The group also said it would grow full-year revenue by up to 40 per cent, with underlying earnings expected to rise by up to 10 per cent.

Joint chief executives Mahmud Kamani and Carol Kane said: “Our infrastructure continues to see record levels of investment as we invest ahead of our growth curve and develop a distribution network capable of supporting £3bn of net sales globally.”

Nick Bubb, retailing analyst and consultant, described Boohoo’s latest figures as “very strong” and New Look’s as “terrible”.