There’s more blood on the high street as New Look announces increased store closures bringing the count to 85, with up to 100 stores also at risk.
In March this year, the high street retailer announced plans to close 60 of their stores as part of a restructuring scheme approved by their creditors. The aim was to cut costs and return the fashion chain to profitability with a turnaround plan that was due to cut New Look’s existing store rents by 15-55%.
Speaking at the time of the March announcement, BBC Business Correspondent, Emma Simpson described the move as a “sticking plaster for a business that’s facing a toxic mix of problems,” claiming that the move was merely buying New Look “some crucial breathing space.” Going by the most recent announcement that sees closures rising from the original 60 up to 85, it appears Simpson was on to something.
Retailers continue to face increased pressure to survive amid challenges including the fall in value of sterling as well as rising wage costs and business rates. Unfortunately for New Look, their struggles spilled into the online arena too as the brand’s online sales have fallen sharply as of last year. Pressure continued to mount as sales on the high street – where they were supposed to hold sway – also faltered.
On a more positive note, despite comparable sales having fallen 3.7% for New Look during the 26 weeks to 22nd September, there’s been an increase in underlying operating profits that have improved to £22.2 million compared to a loss of £10.4m last year.
Speaking on the matter, Executive Chairman, Alistair McGeorge said retailers continue to face “significant headwinds and uncertainties, including Brexit.”
McGeorge continued, “Clearly the wider retail environment remains challenging and we are not expecting that to change anytime soon. However, we are on the right track and continue to drive further efficiencies across the business.”
Plans to increase and return profitability to the business include explanding New Look’s online operation as well as continuing more full-price sales. So far savings of £70m have been achieved and a further £8m have been identified.
In terms of where the plans leave existing stores, of the 60 stores earmarked for closures, 24 are gone, 10 have renegotiated rent and 26 remain open and trading rent free at least until after Christmas.