Written by: Keith Tully
Reviewed: Thursday 8th March, 2018
The clothing retailer New Look is planning to shed close to 1,000 jobs and close 60 of its UK stores as bosses attempt to rescue and restructure the ailing high street operation.
In closing 60 stores, New Look will reduce the scale of its UK estate by around 10 per cent as part of a Company Voluntary Arrangement (CVA) rescue package hoped soon to be agreed with creditors and relevant stakeholders.
There are currently close to 600 New Look stores in the UK and the company’s bosses hope to secure rental reductions on those which remain open after their rescue plan is enacted.
Expectations are that store closures will lead directly to a large number of redundancies but some staff will be redeployed elsewhere in the business where possible, the company has said.
The CVA deal being pursued by New Look’s management team is designed to stave off the threat of a collapse into administration by enabling the business to slash costs and close dozens of its worst performing outlets.
Were the New Look rescue deal to fail, the business would become the latest in a series of high profile retail companies to collapse this year with both Toys R Us and the electricals retailer Maplin having both entered administration in recent days.
Toys R Us reached agreement with its creditors regarding a CVA deal in late 2017 but the rescue plan ultimately failed to save the UK arm of the international toy retailer.
New Look’s most recent financial statements saw it post a nine-month pre-tax loss of £123.5 million while its like-for-like sales fell by as much as 11 per cent during that same period.
“Given our challenged trading performance and over-rented UK store estate, we are having to take tough but necessary actions to reduce our fixed cost base and restore long-term profitability,” said New Look’s executive chairman Alistair McGeorge in a statement.
“We have held constructive discussions with our key landlords and strategic partners and will now seek creditor approval on our CVA proposal,” he added.