New Look chief executive Nigel Oddy this week said that the retailer still believes in the future of the store within an omnichannel context following its landlords and creditors’ acceptance of a new company voluntary arrangement (CVA) that enables it to bring its store rents in line with turnover.
The retailer, ranked Leading in RXUK Top500 research, says that the CVA arrangements, which also include a £40m injection of new capital and a debt-for-equity swap that reduces its senior debt levels to £100m and cuts interest payments, will give it the financial strength that it needs for the future and allow it to invest further in omnichannel.
“We still fundamentally believe the physical store has a significant part to play in the overall retail market and our omnichannel strategy,” said Oddy this week. “We look forward to working closely with our landlords and all creditors to ensure we can navigate the uncertain times ahead together.
“Over the course of the last three years we have successfully implemented our turnaround plan: returning to the broader appeal product and value-led pricing that we are known for, fundamentally realigning our supply chain to be faster and more flexible; making our omnichannel model more cohesive than ever; driving operational efficiencies and bringing in new talent across the business.”
Oddy said that the “relentless focus on our customer-orientated strategy” was the direct result of the impact that Covid-19 had had on its business. “As one of the UK’s leading womenswear retailers, New Look is a brand that has inspired tremendous loyalty over the past 50 years and we are determined to enhance our position as the leading convenient broad appeal fashion destination loved by 25-45-year olds as we navigate the post-Covid-19 landscape.”
When it launched the CVA in August, New Look said the scheme would protect 12,000 jobs but relied on the support of its landlords. The new money will allow it to invest further in omnichannel while continuing to sell clothes designed to have a broad appeal to female shoppers aged between 25 and 45. Oddy previously said that the scheme was necessary in the light of a “likely permanent structural shift in customer spend and behaviour from physical retail to online”. At the time the retailer had reopened 459 of its 496 shops from Covid-19 lockdown.
Daniel Butters, CVA supervisor at Deloitte said: “The approval of the CVA is an important milestone in New Look’s restructuring, enabling the business to move forward. The CVA will provide a stable platform for its management team’s strategy and we wish them well for the future.”
The news comes in the week that the government announced the post-Covid moratorium on commercial evictions would continue until the end of the year. That means businesses cannot be evicted because they do not pay their rents.
Commenting, Tom Ironside, director of business and regulation at the British Retail Consortium, said:
“We’re pleased that govt has listened to us and others on the issue of rents. It remains a difficult time for store-based retailers, who face high costs from coronavirus safety measures, and significantly lower footfall.
"While the extension of the moratorium will provide a respite for many struggling retailers, a large Christmas Day rent bill would be a disaster during the all-important peak trading period. Some protections have not been included in this announcement, such as the ban on statutory demands and winding up petitions. Without these, and County Court judgements, the protections that have been extended will be undermined. Nonetheless, we hope those landlords who haven’t agreed settlements with their tenants will use this extra time and negotiate a reasonable deal that shares the impact of coronavirus fairly.”