New Look bags profit rise as it cuts costs and presses ahead with urgent restructuring and store closures
- New Look profits are back on the up as a result of £70m in cost savings
- Sales continue to fall – down 2.7% to £329.4m in the 13 weeks to June 23
- The retailer is closing 70 stores as it strives to turn its fortunes around
Ailing fashion firm New Look has fashioned a slight rise in profits as its efforts to cut costs start to pay off and it ploughs ahead with the closure of 70 under-performing stores.
The retailer, which is trying to appeal to a broader range of shoppers under new boss Alistair McGeorge, said profits edged up 1.5 per cent to £27.6 million in its first quarter.
It put this down to cutting £70 million of costs in the 13-week period, with plans to find more savings in the months ahead.
New Look is closing 70 of its shops through a Company Voluntary Arrangement (CVA)
However, sales continued on their downward spiral, falling 2.7 per cent to £329.4 million.
On a like-for-like basis, sales dropped 4 per cent – less steep than the 8.2 per cent recorded for the same period last year.
New Look is one of a number of retailers currently going through a Company Voluntary Arrangement (CVA) – an urgent and controversial restructuring process that enables firms to exit loss-making stores.
New Look is trying to appeal to a broader audience as is struggles to compete with the likes of Primark
New Look’s CVA to shut 70 of its 600 UK shops will affect close to 1,000 jobs.
McGeorge, who was previously chaired the retailer between 2011 and 2013, returned to the business at the end of last year to help steer its return to health.
His initiatives include dropping prices and broadening New Look’s appeal
‘As we recover the broad appeal of our product, we were pleased to improve our market performance and deliver better customer conversion rates. This shows the strength and resilience of our brand, and the positive impact of the changes we are making,’ he said.
‘Our turnaround plans continue, and we will deliver further operational efficiencies whilst maintaining our resolute focus on our core strengths and heartland customer to ensure we remain on the right track.’
On an underlying basis, operating profits advanced 19 per cent to £14.4 million.