New Look to axe up to 980 jobs under rescue plans
New Look plans to close nearly 10% of its 593-strong UK store estate and slash rent on nearly 400 shops under a company voluntary arrangement (CVA).
Up to 980 jobs are being axed at embattled retailer New Look under proposals to shut 60 stores and slash rent on nearly 400 shops as part of a rescue plan.
New Look said it was looking to close nearly 10% of its 593-strong UK store estate, with a further six sites that are sub-let also due to shut as it pushes ahead with a company voluntary arrangement (CVA).
It said the closures would lead to redundancies, with up to 980 jobs out of its workforce of 15,300 under threat, although it said it would look to redeploy staff where possible.
Its rescue plan will also see the group ask landlords to slash the rent and revise leases on 393 stores across the UK.
Alistair McGeorge, executive chairman of New Look, said: “Given our challenged trading performance and over-rented UK store estate, we are having to take tough but necessary actions to reduce our fixed cost base and restore long-term profitability.”
New Look is an iconic brand on the high street and the CVA will provide a stable platform upon which management’s turnaround plan can be delivered Daniel Butters, Deloitte
New Look confirmed that all stores will remain open as normal until creditors vote on the CVA proposal on March 21.
Details of the potential job losses and store closures follow dire figures from New Look last month, when it posted a pre-tax loss of £123.5 million in the three quarters to December, while UK like-for-like sales plunged 10.7% and online sales fell 15%.
It comes in a dismal start to 2018 for the UK high street, with the collapse of Toys R Us and Maplin last month and a host of restaurant chains undergoing painful restructurings, including eateries run by celebrity chef Jamie Oliver, as well as Byron and Prezzo.
Retailers have been hit hard over the past two years by surging wage costs, eye-watering business rate hikes and inflation caused by the weak pound, which have coincided with falling consumer confidence.
Daniel Butters, a partner at Deloitte who is handling the New Look CVA, said: “The retail trading environment in the UK remains extremely challenging, driven by weaker consumer confidence, the implications of Brexit and competition from online channels.
“New Look is an iconic brand on the high street and the CVA will provide a stable platform upon which management’s turnaround plan can be delivered.”
He said they believed it was a “fair proposal” for New Look’s landlords and stressed that “employees, suppliers and business rates will continue to be paid on time and in full”.
A CVA is designed to allow a company and its creditors to reach agreement and avoid administration.
New Look, owned by South African investment group Brait, is also struggling under £1.2 billion of borrowings but is not seeking a debt restructuring.
Its previous chief executive Anders Kristiansen left abruptly in September last year, with former chairman Mr McGeorge parachuted back in for another stint at the firm.