Multichannel retailer New Look said that its turnaround programme was starting to make a difference at the bottom line as it reported falling sales but growing profitability in the first half of its financial year.
Today the fast fashion brand, ranked Leading in IRUK Top500 research, reported sales of £656.9m in the six months to September 22, down by 4.2% on the same time last year, but an underlying operating profit of £22.2m – from a loss of £10.4m last time. Earnings before interest, tax and asset write-downs (EBITDA) came in at £49.8m from £24.2m last time. The retailer said that the fall in sales was in line with expectations, and came as it focused on more profitable sales.
New Look said that in-store and ecommerce conversion rates had improved since the first quarter of the year, and that ecommerce profitability had continued to increase “substantially”. Some 41% of online orders were picked up in store – up from 28% a year earlier. The service, said New Look, was helping to drive footfall into stores.
The update comes a year after New Look declared a back to basics approach under the resumed leadership of executive chairman Alistair McGeorge. Since then, the retailer has worked to rebuild its position in the UK womenswear market and won backing for a company voluntary agreement that will see up to 60 stores close and reduce rents on 393 stores by between 15% and 55%, while making up to 980 people redundant. It has pulled out of its Chinese retail business, where both sales and profits had fallen short of targets. New Look said today that it had made annualised cost savings worth £70m over the year, and had identified a further £8m in future savings.
McGeorge said he was encouraged by the first-half performance, which, he said, “reflects the progress we are making with our ongoing turnaround plans to rebuild our position in the UK womenswear market. The significant cost savings which have been implemented are delivering improved profitability and we continue to se better performance in our new womenswear ranges.”
He added: “We continue to work hard to accelerate our progress but we are facing into significant headwinds and uncertainties, including Brexit. 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. As we look to the second half, our focus will be to continue to improve our financial and operational stability and further capitalise on our brand strength to position us well for the future.”
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