New Look acknowledges 'disappointing quarter' in 'difficult' market
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% plunge in underlying operating profits to £12.1 million for its first quarter to June 24 after UK like-for-like sales slumped 7.5%.
On a bottom line basis, the group fell into the red with losses after tax of £15.2 million against profits of £5.8 million 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%, while overall brand sales dropped 8.2%.
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 told the Press Association: "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.
He said the group "believes very much" in its UK store estate, with 98% profitable, but keeps it under review every quarter.
New Look is also setting its sights online and overseas to help offset the tough UK high street conditions.
Having spent £100 million over the last three years on systems and a new website, Mr Kristiansen said "we continue to invest heavily in this business".
The group's new website went live on August 8, while it has also expanded its menswear stores to 22 and is trialling new shops with a flagship outlet set to open on Oxford Street in November.
Its operations in China likewise continue to grow, with another 17 stores opened, taking the total to 127.