New Look suffers 12% slump on high street
Fashion retailer New Look has reported an operating loss of £74.3m for the year to March 24.
Two months after it announced that it would shut 60 stores the chain, which made £97.6m profit in the previous year, saw UK sales fall by 11.7%.
In total, New Look's revenue was £1.34bn, down from £1.45bn the previous year.
The retailer has 26 stores in Northern Ireland.
New Look has instigated a company voluntary arrangement (CVA) and has sought approval from creditors on a plan to improve performance.
It has announced the closure of some stores and rent reductions in others.
It's understood that some of its 26 local stores have been subject to rent cuts.
New Look said yesterday that its CVA would see the business save £40m.
Executive chairman Alistair 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."
He said New Look would lower its prices in a bid to lure back customers.
He added: "Quite frankly, we have disappointed some of our best customers. 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 company was hit with a £34.2m one-off cost, which included an exceptional charge from stock clearances.
He explained: "Last year was undoubtedly very difficult for New Look, with a well-documented combination of external and self-inflicted issues impacting our performance. Trading conditions will remain tough in the year ahead, but further operational efficiencies and a resolute focus on our core strengths and heartland customer will help to ensure we remain on the right track."
It's the latest chain to resort to the CVA model to slash costs after Carpetright, Mothercare and restaurant business Prezzo.
House of Fraser is also expected to release details of its CVA under plans to shut 31 stores. Its sole outlet here in Belfast will remain open.
The use of CVAs by major outlets has sparked a backlash from landlords in Northern Ireland.
Last month the Belfast Telegraph revealed that landlords here were increasingly resisting the arrangements, which typically see them asked to slash the rent.
Kieran McGarrigle, finance partner at law firm Arthur Cox in Belfast, recently revealed that he was advising landlords, including private equity owners of shopping centres, on how they can resist the process.
While landlords can vote on whether or not they accept the CVA, he said the proportion of the total debt owed by the retailer was typically not big enough to enable them to reject a CVA proposal.
The lawyer said local landlords were considering High Court action that could include joining forces with landlords in Britain to bring proceedings in a class action.