New Look [IRDX RNEW] this week set out plans to reduce its stores by up to 60 in number as it enters a company voluntary arrangement in the face of a “challenged trading performance and a difficult retail environment”.
The fast fashion retailer expects to make up to 980 people redundant as a result of closing up to 60 of its stores – including sites in London’s Oxford Street and Reading’s Oracle Centre – although it said it would redeploy staff within the business where possible. The move would see it reduce its rental costs as it looks to improve operational performance.
The retailer, a Leading trader in IRUK Top500 research, needs creditor approval on March 21 in order to go ahead with the plan. In the meantime, it says its ecommerce website and UK stores will continue to trade as normal.
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.
“We have held constructive discussions with our key landlords and strategic partners and will now seek creditor approval on our CVA proposal. A priority for us is to keep all potentially affected colleagues informed during this difficult time.”
Daniel Butters, partner at Deloitte, is appointed nominee to the CVA, along with colleague Neville Kahn. He 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. We have fully engaged with the British Property Federation and its members and their views are reflected in what we believe is a fair proposal to restructure the property obligations of the company.
“It is important to stress that no stores will close on day one, and employees, suppliers and business rates will continue to be paid on time and in full.”
Stephanie Pollitt, assistant director (real estate) at the British Property Federation (BPF) said: “These situations are never easy as landlords need to take into consideration the impact on their investors, including those protecting pensioners’ savings, as they vote on the CVA proposal.
“New Look and Deloitte, however, have demonstrated best practice, constructively engaging with the BPF early in the process and ensuring landlords’ interests have been properly taken into account. Ultimately, it will be for individual landlords to decide how they will vote on the CVA, but the proposal has sought to find a solution that works for all parties.”