New Look has blamed a steep fall in sales on weak consumer spending and mild autumn weather which knocked demand for its new winter clothing ranges.
New Look chief operating officer Nigel Oddy said the 7.4% drop in first half like-for-like sales reflected “ongoing consumer uncertainty and seasonal volatility”. Sales picked up over the summer months but fell back again in September due to the “unseasonably warm weather” which also affected demand at Next and Marks & Spencer stores.
Oddy is working with the executive chairman Alistair McGeorge, who returned to the helm in 2017 having successfully led a previous revamp, on a turnaround of the private equity backed business in which half year losses narrowed from £42m to £11m on sales of £524m in the six months to the end of September.
Last year it used a company voluntary arrangement – a form of insolvency – to close 102 stores and slash its rent bill.
The turnaround team has blamed the retailer’s problems on a move into selling clothes that were too young and edgy that had alienated its core customers.
To rectify that New Look said only 2% of this year’s winter clothing range was the “trend” product that accounted for 75% of the 2018 ranges. It had also cut the size of the range by a quarter and decreased the clothing lead times by 12 days so it could repeat successful products.
“We have reviewed our entire product range,” Oddy said. “Our offer is now much improved as we focus on buying into successful trends quickly.”
However, GlobalData retail analyst Sofie Wilmott said there was little evidence that, two years in, the turnaround was bearing fruit and suggested there was a risk it could lose shoppers who went there to buy low priced, on-trend pieces.
“New Look is at risk of going down the same road as M&S by offering a range that is too safe,” she said.
Brait, the investment vehicle controlled by South African billionaire Christo Wiese, paid £780m for a majority stake in New Look in 2015 but its holding was diluted as part of this year’s debt restructuring that reduced the debt it was carrying from £1.35bn to £350m. Brait remains the biggest shareholder with a 18% stake.
