New Look is no longer a retail disruptor, but instead among the disrupted, according to one analyst, as the UK value fashion retailer swung to a half-year loss amid what it called “another tough period of trading”.
For the 26 weeks ended 23 September, the company’s loss reached GBP72.7m (US$95.6m), compared to earnings of GBP0.9m last year. Underlying operating loss totalled GBP10.4m, compared to underlying operating profit of GBP59.3m in the year-ago period.
Go deeper with GlobalData
New Look brand like-for-like sales were down 8.6% in the quarter, while UK like-for-like sales dropped 8.4%. Net sales also slipped, falling 4.5% to GBP686m from GBP718.1m last year.
Own website sales for the period, meanwhile, dropped 7.6%, while third-party e-commerce sales jumped 17%.
In its first-half earnings release today (7 November), New Look announced it has named Alistair McGeorge as executive chairman of New Look with immediate effect. Danny Barrasso, formerly interim-CEO has returned to his previous role of UK & Ireland managing director.
McGeorge, who said he is “delighted” to return to New Look, said the immediate focus in the period of transition will be to deliver stability and get the business back to basics by reconnecting with the customer and recovering the brand’s “broad appeal”.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataHe added today’s results reflect another tough period of trading for the company amid a challenging retail environment on the UK high street, but remained optimistic about the retailer’s future.
“Whilst we’re not anticipating a reversal in fortunes overnight, I am confident we will implement the necessary changes to get the company back on track. We will focus on ensuring that we buy into the right trends with the right product, have an efficient supply chain, and provide customers with great value.
“New Look is a remarkable brand supported by brilliant people, and we will focus on getting back to basics and rebuilding our position within the UK womenswear market.”
Kate Ormrod, lead retail analyst at GlobalData, notes New Look remains under pressure from the likes of ASOS, Boohooh and Primark as its offer lacks a competitive edge. “With a large UK portfolio of 596 stores, New Look must reignite destination appeal especially as its online channel continues to struggle.”
She adds that while the retailer has stressed it has sufficient liquidity and cash, the real concern is its fall into the red. “Cost control must be high on the agenda in 2018 – a challenge when so much investment is required to revitalise the business, not least in price. Avoiding unnecessary discounting in the run up to Christmas is essential.”
Meanwhile, Ormrod cautions there is no “quick fix” for New Look, which she says has lost relevance among shoppers, with its “strategic focus on menswear and desire to be seen as more of a unisex brand leaving its womenswear offer to stagnate” – a mistake she says will never go unpunished by rivals. While the appointment of McGeorge as a safe pair of hands will provide comfort during challenging times, Ormrod says “radical change” is required to get back on track.
“Driving product appeal with a differentiated offer and regular newness, showcasing its design credentials and value for money must be at the core of New Look’s turnaround strategy or it will cede further UK clothing market share in 2018, with the retailer already forecast to lose 0.2 percentage points this year.”
