New Look to row back on Chinese expansion as returning chairman takes charge
The fashion chain once had plans to open up to 500 stores in China.
New Look is reviewing its operations in China as the retailer’s new executive chairman rows back on ambitious plans set in train under former boss Anders Kristiansen.
Weekly Business Digest Newsletter
The fashion chain once had plans to build a sprawling store portfolio in the Asian powerhouse, and was aiming to open 500 outlets in a bid to capitalise on the country’s growth prospects.
However, chairman Alistair McGeorge, who re-joined the business in November last year, told the Press Association the retailer is looking at “downsizing” its estate.
“We are taking a view on all our stores,” he said. “We are taking a good hard look, and we will probably do some downsizing.”
New Look, which is ultimately owned by South African billionaire Christo Wiese, now has 148 stores in China.
It owns and operates the outlets directly, rather than through a franchise agreement.
Mr McGeorge, who was formerly executive chairman between 2011 and 2013, has returned to the business at a torrid time for the UK high street.
Only days ago, New Look swung to a mammoth full-year loss amid plunging sales on the high street and online.
The retailer reported an operating loss of £74.3 million for the year to March 24, having made £97.6 million profit in the previous year.
Earlier this year, New Look received approval from landlords for a Company Voluntary Agreement (CVA), which will allow it to shed 60 stores, affecting close to 1,000 jobs.
Some landlords who were faced with the prospect of rent reductions under the CVA have opted to take back their leases, meaning 70 stores will eventually close.
“It is progressing very well in that we have realigned the business,” Mr McGeorge said.
“Without it we probably would have been out of money, and we took the landlords along with us. But in itself it doesn’t fix the business.”
The CVA is just one part of Mr McGeorge’s turnaround plan for the business, which will involve a significant U-turn from Mr Kristiansen’s strategy.
Mr McGeorge is lowering prices and targeting a broader range of customers, taking a poor view of the former boss’ bid to ape the likes of Boohoo and Asos, which have a younger target audience.
New Look is also scrapping its push into menswear, with male-focused stores closing as part of the CVA.
It is understood that Mr McGeorge believes women will buy menswear in New Look for the men they know, but that standalone stores for men do not work for a brand marketing itself to women.