New Look has announced its company voluntary arrangement (CVA) has been approved by an overwhelming majority of its creditors – a move that means 60 stores are due to close resulting in up to 980 redundancies.
In an announcement earlier this month, New Look said it is seeking approval from creditors on a plan to improve the operational performance of the company amid a difficult retail environment and challenged trading performance.
Under the proposal, New Look identified 60 out of its total 593 stores in the UK for potential closure – including its two flagship stores on Oxford Street – alongside a further six sites which are sub-let to third parties. The proposal also includes a reduction in rental costs and revised lease terms across 393 stores.
The retailer warned that, should the proposal be approved, it would be required to make a maximum of 980 employees redundant. The company currently has a UK staff base of 15,300.
In a statement released yesterday (21 March), New Look said 98% of votes were in favour of the proposal.
“In order to help restore long-term profitability, it is clear we need to reduce our fixed cost base,” said executive chairman Alistair McGeorge. “We are therefore pleased to have gained the support of our creditors to address our over-rented store estate. Launching a CVA has been a tough decision and our priority remains keeping all potentially affected colleagues informed during this difficult time.”
McGeorge adds the CVA is “one of a number of necessary actions” the company is taking to get back on track.
In addition to implementing other cost-saving initiatives, he says the retailer is focusing on driving future full price sales by realigning its pricing to offer significantly better value, adding flexibility to its buying model, and improving speed to market. It has also concentrated its efforts into further strengthening its alignment between e-commerce and stores.
“New Look is a great brand and today represents another important step in helping to rebuild our position within the UK market,” McGeorge said.
Under the terms of the CVA, New Look said the stores identified for potential closure are most likely to close within six to 12 months’ time subject to decisions by individual landlords, but cautioned no stores will close on day one.