New Look is moving away from teenage fashion and aiming at a more mature customer, as its eyes a return to pre-tax profit and a refinancing of its £1bn of net debt. Chairman Alistair McGeorge, said the fashion chain, owned by private equity groups Permira and Apax as well as founder Tin Singh, had “polarised too young, and prices had gone too high”.
New Look is changing its logo and aiming to create a more grown-up feel to its stores. It is installing online ordering points and, in some shops, body-scanning booths with a value of around £50,000 each, which will take customers’ measurements in order to gain a better fit on clothing.
Mr McGeorge said the retailer was achieving market share among slightly more mature customers, adding that it had slashed its prices on some key lines to address the idea that it was too expensive.
He added: “We do fashion for the broad church. We want to be selling garments that a 20-year-old would wear and a 40-year-old would wear. That is where we sell a lot of them.”
The comments come as New Look announced UK like-for-like sales, excluding VAT, were down 3.1 per cent in the six months to September 22. However, incomes before interest, depreciation, tax and amortisation increased by 25 per cent to £86.9m, facilitated by more full-price sales, and cost savings.
“The focus for us is about selling product for full price”, said Mr McGeorge. “Sales are lower, but these are the sales we would have been selling at half price.”
New Look plans to continue this stance through the important Christmas trading period.
At the end of the first half, New Look had started to see like-for-like sales growth. At the pre-tax level, New Look still made a loss, of nearly £10m. Though it expects to make a pre-tax profit for the full year, said Mr McGeorge.
The group has revamped 62 stores so far, increasing to about 140 by the end of its financial year.
Finance director, Alastair Miller, said this had generated about a 10 per cent sales lift, compared with those stores not refurbished.
New Look has a little more than £1bn of net debt, together with around £700m of payment-in-kind (Pik) notes.
The company paid back £73.8m of debt in the first half, and bought back £25m of Pik notes. This followed New Look agreeing a so-called “amend and extend” arrangement on its debt.
Mr Millar said: “Clearly we will have to find a bigger solution for the Pik in the next 12-18 months, probably by way of a refinancing.”
The group has approximately 100 leases expiring in the next two to three years. Mr McGeorge said that in three years’ time, the retailer could have reduced its commercial property portfolio to around 450-500 stores. Today the company has 600 stores, so it appears a number of branch closures are being contemplated.
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