New Look today emphasised a turnaround strategy of cutting prices, improving the speed to market and better connecting sales channels as it reported falling sales, both online and offline, and profits in its latest financial year.
The fast fashion brand, a Leading retailer in IRUK Top500 research, said that revenue came in at £1.3bn in during the year to March 24. That’s down by 7.3% on the same time last year. Sales via its own website were 19.2% down, although third-party ecommerce sales were 15.5% up on last time. It reported a £10.7m loss in adjusted earnings before interest, tax and asset write downs, which included £34.2m of one-off costs and said its underlying operating loss came in at £74.3m.
New Look said that the results of its turnaround plan would, however, be seen as early as its current financial year. That plan focuses on cutting prices to offer better value, rather than periodic discounting: New Look says 80% of its products will now sell for less than £20. At the same time, its supply chain is being reshaped around more flexible buying, a faster response to changing trends and getting those new styles to the market.
Its multichannel strategy sees prices aligned across store and online channels and further investment into improving the online customer journey. Store layouts have also been simplified.
“Last year,” said executive chairman Alistair McGeorge, “was undoubtedly very difficult for New Look, with a well-documented combination of external and self-inflicted issues impacting our performance.
“Since November we have focused on making the necessary changes to get the company back on track and reconnect with our customers. Our turnaround plan is now well underway and we have already made substantial operational improvements to help stabilise the business, reduce our fixed cost base and put us in a better position to drive future full-price sales. We have started the new financial year with a much cleaner stock position and are now seeing green shoots emerge.
“We still have more work to do to restore long-term profitability, but I am confident we are now better placed to achieve this than we were when I returned to the business over six months ago. Trading conditions will remain tough in the year ahead, but further operational efficiencies and a resolute focus on our core strengths and heartland customer will help to ensure we remain on the right track.”
Our view: This strategy update emphasises the way that New Look has had to become ultra-competitive in the face of its pureplay rivals. On the same day as it put out these results, direct competitor Boohoo reported its sales were up by more than 50%, both in the UK and internationally. Boohoo said that growth came thanks to the low cost of its product combined with strong customer service, but, compared to New Look, it also benefits from not having a large legacy store base, or indeed debt incurred through a private equity sale. New Look is already working to reduce its store numbers by 60 from 593, courtesy of a CVA that it says will save it about £40m, as it reshapes its business for the way customers now want to shop. Time will tell if it’s done enough, soon enough, to prosper in the long term.
Image courtesy of New Look