New Look to close 60 stores, putting 980 jobs at risk

Fashion retailer New Look said on Wednesday that it plans to close 60 of its 593 UK stores, putting up to 980 jobs at risk.

The company, which said back in February that it made a third-quarter pre-tax loss of £123.5m as sales declined 6% to £1.01bn, announced a proposal to cut its UK store estate and rental costs amid a challenging trading performance and a difficult retail environment.

As part of the proposals, New Look has instigated a voluntary redundancy process, but said all efforts will be made to redeploy colleagues within the business where possible.

The group is currently seeking creditor approval on the proposal, which is due on 21 March. All stores will remain open as usual until then, while the online sales channel will be completely unaffected by the changes put forward.

In addition to the 60 store closures, New Look wants to close a further six sites that are sub-let to third parties and revise lease terms across 393 stores.

Executive chairman Alistair McGeorge said: "Given our challenged trading performance and over-rented UK store estate, we are having to take tough but necessary actions to reduce our fixed cost base and restore long-term profitability.

"We have held constructive discussions with our key landlords and strategic partners and will now seek creditor approval on our company voluntary arrangement proposal. A priority for us is to keep all potentially affected colleagues informed during this difficult time."

Stephanie Pollitt, assistant director of real estate at the British Property Federation, said: "These situations are never easy as landlords need to take into consideration the impact on their investors, including those protecting pensioners’ savings, as they vote on the CVA proposal.

"New Look and Deloitte, however, have demonstrated best practice, constructively engaging with the BPF early in the process and ensuring landlords’ interests have been properly taken into account. Ultimately, it will be for individual landlords to decide how they will vote on the CVA, but the proposal has sought to find a solution that works for all parties."

In its third-quarter results last month, the retailer said sales and margins had been hit by a high level of discounts, with group like-for-like sales in the 39 weeks to 23 December 2017 down 10.6% and UK LFL sales 10.7% lower.