New Look today set out its strategy of cutting down the number of different lines it sells in its stores and online, reducing the size of its range in order to improve the customer experience. The retailer is instead giving shoppers more choice about how they buy its goods, selling online through eBay and Next alongside its own website and local, smaller, stores.
New Look said it had reduced options by a “significant” 25% in store and 32% online as it focused on core and broad appeal clothing, which made up 98% of its autumn and winter lines. Last year, trend and fashion focused lines accounted for 75% of the product mix. At the same time, it improved its speed to market, with average lead times reduced by 12 days.
Nigel Oddy, chief operating officer at New Look, said: “The first half of this financial year has been incredibly busy for New Look as we focused on strengthening the operational foundations of the business. We have reviewed our entire product range, improved our lead times, enhanced the customer journey, revitalised the company’s values, and have begun to make the necessary changes to our leadership.
“As we continue to recover the broad appeal of our product, our offer is now much improved as we focus on buying into successful trends quickly.”
The retailer is also expanding its channels to market, and is striking online partnerships with eBay and Next. Its click and collect channel continues to grow, accounting for 45% of online sales during its latest half-year, and the retailer said that having stores close to the consumer remained important. It is investing in smaller profitable stores and replacing in-store menswear with third-party concessions that generate income.
Oddy said: “New Look’s localness – the breadth of our estate and the convenient locations of our stores – is a key differentiator that we will continue to capitalise on, and I am pleased that we are delivering record levels of Click & Collect orders in our stores.”
Setting out the figures
The fashion retailer, ranked Elite in IRUK Top500 research, today reported first-half revenues of £523.8m, down from £601.1m a year ago. It said its pre-tax loss narrowed to £11.2m from £41.9m a year earlier. UK and like-for-like sales (LFL) – which strip out the effect of store openings and closures – fell by 7.4% over the half year, in what New Look said reflected ongoing consumer uncertainty and seasonal volatility. But it pointed to improving LFL sales between the first quarter (-10.1%) and the second (-4.6%).
Alistair McGeorge, New Look executive chairman, said: “Nigel and the team have made good, tactical progress to improve our product, speed to market and leadership capabilities, all whilst maintaining good control of our stock, cash and costs.
“We are reviewing our customer strategy, and, as I have said before, investing in our leadership and people will be the single biggest enabler to transforming our business.
“This time last year we were forced to trade for cash to meet our interest obligations and we lacked the financial stability needed to operate effectively and invest in the business. Now, with our financial restructuring complete, we are in an entirely different position, with a materially deleveraged balance sheet, lower cash debt servicing costs and strengthened liquidity.
“Even set against the tough trading conditions of H1, we enter H2 with much improved operational foundations and a healthy balance sheet capable of weathering continuing volatility in the retail and consumer environment. Whilst we do not expect the retail environment to improve, we expect a better second half performance as we focus on driving profitable sales, maintaining strong control over our cost base and investing prudently in our people.”
Commenting on the figures, Sofie Willmott, lead retail analyst at data and analytics company GlobalData, said today’s figures suggested New Look’s previous corrective actions appeared not to have been enough to drive growth and market share. If it is on the right path, it will need to grow its LFL sales in the second half of the year, she said.
Willmott said “Adjusting its product range is a key focus for New Look with the view that its offer has been too fashion focused in the past few years, however with 98% of autumn/winter now classed as ‘core’ and ‘broad appeal,’ the retailer is in danger of losing shoppers who go to New Look for low priced, on-trend pieces.”
She added: “Alongside reviewing its product proposition, New Look is clearly making other major changes in order to explore new opportunities, which is wise and necessary in the fast changing retail market. Opening its first New Look Girl branch in Bluewater stocking the 915 range (in a space previously occupied by New Look Men) and launching on both Next and eBay shows that its refreshed management team are open to new routes to market for the brand. Given Next’s strong performance online, New Look should benefit from being present on its site however it must ensure that its own website sales are not further cannibalised by offering different ranges and exclusives on each platform.”
Our view: New Look has taken the view that selling fewer lines will improve the customer experience – and it’s reduced its in-store range by a quarter and its online range by a third. A smaller range, of course, is easier to fit in the smaller shops that New Look is now investing in in the wake of last year’s CVA and store restructuring programme. But we can also see how that chimes with ongoing trends towards minimalism and cutting down on clutter. By focusing on giving customers the key items that they want, New Look escapes offering a wide and potentially unprofitable range. The trick now will be to make sure that the clothing it is selling are the items that customer truly want the most.
Image: InternetRetailing Media/Paul Skeldon