Core Q1 revenue slipped 14% to GBP258.3m, from GBP300.6m a year earlier

Core Q1 revenue slipped 14% to GBP258.3m, from GBP300.6m a year earlier

New Look remains confident in its turnaround strategy after the UK fashion retailer narrowed its loss in the first quarter, despite sales continuing to fall. 

For the 13 weeks ended 29 June 2019, the company said ongoing restructuring efforts helped improve statutory loss before tax by GBP12.8m to GBP2.7m (US$3.3m), from a loss of GBP15.5m a year earlier. 

Core revenue, meanwhile, slipped 14% to GBP258.3m from GBP300.6m in the prior-year period. The retailer's 'core business' comprises UK and Republic of Ireland (ROI) retail, e-commerce, third-party e-commerce, and franchise. 

Core like-for-like sales, which reflects UK and ROI retail and e-commerce as owned New Look operations, fell by 10.1%, with the retailer blaming the decline on lower footfall due to highly unseasonable weather and ongoing consumer uncertainty.

New Look did, however, note an improvement in trading performance for the first eight weeks of the second quarter, with like-for-like sales up 2.2%.

"As we previously announced at our full-year results, Q1 trading was marked by continued consumer uncertainty and, being a seasonal business, we were clearly not immune from what has been the most unseasonable May and June on record, impacting footfall across the retail sector," said executive chairman Alistair McGeorge.

"Despite these challenges, we maintained good control of our stock, cash position and costs. I am pleased our recent trading shows that we have delivered positive like-for-like sales performance and we have outperformed the market according to the British Retail Consortium, which underlines our continued confidence."

McGeorge added a key focus during the first quarter was to conclude the retailer's comprehensive financial restructuring, which it successfully completed in May, helping to secure its long-term future.

COO Nigel Oddy concurred, noting the successful financial restructuring "positioned us at the starting line."

"The turnaround continues and we are focused on driving transformational change," he said. "I am confident the business has the right foundations in place and will continue to strengthen as we attack the future through delivering fantastic product to our customers, building brand equity and grasping new market opportunities."

He added: "'Broad appeal' and 'core' clothing categories now represent 95% of our product mix and this enhanced offer is resonating with our customers. We are transforming our attitude to buying and are fully focused on buying into successful trends quickly, supported by an improved supply chain."

Troubles continue despite business overhaul

Pippa Stephens, retail analyst at GlobalData, notes the retailer continues to struggle, with UK and ROI retail sales for the first quarter down GBP35.5m. "Although shuttering six stores in the UK and ROI during this period will have dented New Look's sales, like-for-likes were also down 10.1% for the core business, so it must continue to focus on improving its remaining stores to boost footfall."

However, Stephens says the retailer is "starting to show signs of green shoots," with like-for-like sales rising 2.2% for the first eight weeks of the second quarter. 

"While its 'Revive' programme for refurbishing its smaller destinations will help to attract shoppers, it should also improve its visual merchandising by displaying products more clearly to enhance the shopping experience, as its stores often feel cluttered – making them difficult to browse."

New Look reported that unseasonable weather bolstered performance of outerwear, with dresses and separates suffering, so must ensure that transitional products are included in its ranges to mitigate ongoing problems, Stephens adds.

"It has made notable recent changes to its ranges, including an overhaul of its denim range, and the introduction of New Look Kind – a sustainability initiative, which uses icons to highlight each product's environmental credentials. While these improvements will help to win over shoppers, showcasing them via its collaboration with Rochelle Humes and on its own social media platforms will boost interest further.''