Now that New Look has done its debt deal, all eyes are on how it can improve its financial performance. Retail Week looks at what the retailer is doing to reclaim its position as a leader in the value fashion sector.
Executive chairman Alistair McGeorge was damning in his critique of the New Look he took over: the leadership team wasn’t strong enough, its product had gone too young, its prices too high, its supply chain was too slow and its in-store presentation was weak.
Now, a year on, the retailer is on track he insists. McGeorge says New Look – which experienced a £44m fall in EBITDA to £147m in its year to March 31 - will return to growth this year.
It’s clearly been a busy year for the former Matalan chief executive. He has sorted out New Look’s pricing, made progression with its supply chain – “It’s better and faster and we have 10% less stock in store,” he says – and, despite the raft of management departures, its new leadership team have started to bed in.
Structural changes are in motion too. As the retailer’s online sales continue to grow apace, it is to close 50 to 100 stores across its mammoth 600 strong portfolio.
But work needs to be done to woo customers back to store. UK like-for-likes dropped 5.7% last year, however McGeorge says he was encouraged by a much stronger second half as changes to its product mix started to come through in-store.
His focus is on broadening New Look’s appeal. He was insistent that the retailer went too young in its product range and is striving to redress the balance.
“We’re bringing more product in,” he says. “We serve customers anywhere from 15 to 45. We’re not about edgy fashion, we’re about clothes that are wearable.”
As its product lost relevance with its customer base over the past two years, the retailer was forced to sell on mark down. But McGeorge believes by broadening its product, and sharpening its value edge, it can return to growth this year by focusing on full price sales.
He is also pushing the button on creating a new look New Look, by revamping its store portfolio. 120 stores will be refurbished in the next 12 months.
It all sounds sensible so far, however the changes are yet to shine through in the numbers.
Undoubtedly, the unpredictable weather won’t have helped matters, however returning to profit growth this year seems like a tall order. New Look’s store closures - most of which will come through lease expiries - will take three to five years and changing the mindset of the dissatisfied consumer could be a lengthy process.