New Look’s turnaround plans focus on building brand equity and enhanced product range rather than extending its physical presence.
Elite brand New Look has not avoided the recent high-profile problems of UK retailers, entering a CVA (company voluntary arrangement) in March 2018, and announcing multiple store closures and staff redundancies while negotiating a debt for equity swap with its key financial stakeholders.
A year later, the company is back in the black with profits for the 39 weeks to 22 December 2018 (Q3) increased by 78% to £78m, thanks to a renewed focus on its key markets and revised product ranges. Despite its problems, it’s a brand that remains a favourite with many more than its 3.5m Facebook followers.
Founded by Tom Singh in 1969, New Look, like many leading brands, had embraced global expansion with around 900 stores in more than a dozen countries from Romania to China. While UK stores have suffered from the switch to online shopping, elsewhere in the world – notably China – local economic problems did little to help profitability.
The turnaround strategy has been drastic: up to 100 stores have, or shall be, closed in the UK, New Look’s 120 outlets in China have gone, its Belgium and Polish arms both filed for insolvency, and its 30 outlets in France are up for sale. The company is also pulling out of the real-world menswear market with closure of its men-only outlets and removal of the collection from its other stores with the range becoming online only.
Pulling back from having physical global presence doesn’t mean that New Look is eschewing international markets. The long list of countries it delivers to runs from Andorra to Uruguay, with free delivery on orders of more than €65. It also sells through online third parties, including Amazon, Asos and Zalando.
Click and collect, which now accounts for 47% of its online sales, is driving greater footfall to stores. Its delivery options are also extensive, while its “delivery pass” – for £19.99 a year – provides unlimited next-day or nominated-day delivery for regular shoppers. There is also a “New Look Card” which combines credit facilities with loyalty rewards including exclusive offers, prizes – such as “shopping sprees, luxury holidays and a brand new Fiat 500” – and online account tracking.
Under its executive chairman, Alistair McGeorge, New Look has also refocused its product range to its core market after styles in recent years have been regarded by some as “too young and too edgy”.
As McGregor added when announcing the latest financial results: “Our return to broad appeal product continues to enhance profitability, our supply chain lead-times have improved, and we have exceeded our planned cost savings… Upon completion of the restructuring, our focus will be to further enhance profitability by continuing to provide fantastic product for our customers, building brand equity and grasping new market opportunities.”
