Budget fashion retailer, New Look, which today revealed a drop in like-for-like sales and annual profits, is right to relocate to bigger stores, says a retail analyst.

Bryan Roberts, from Retail Intelligence, said part of New Look's problems lie in the fact that its stores are too small.

He said the mood for discounters was changing and New Look must "tidy up" its stores to keep ahead.

"It has had some supply chain problems but its stores are too small. It needs bigger stores.

"Mr Roberts was echoing the views of New Look's chief executive, Stephen Sunnucks, who said the company would continue to relocate to larger premises.

Mr Sunnucks said that New Look's smaller stores had "markedly underperformed" in like-for-like sales.

But he said the problems of relocating to bigger stores limited the number it could move to in a year.

Like-for-like sales were down 1.6 per cent in the 10 weeks to June 2 and profits before tax and exceptional items fell 29 per cent in the 52 weeks to March 24.

The news comes just a month after New Look announced board room changes and the restructuring of certain roles to enhance the senior management team.

They included the appointment of John Grieves as non-executive chairman, who took over from Howard Dyer.