Value fashion retailer New Look’s first-half figures showed signs of progress in its recovery following last year’s CVA and resulting financial restructuring.

New Look cut its statutory loss by £30.7m to £11.2m as initiatives such as a refocusing of the product offer began to pay off.

However, the retailer’s sales line looked less encouraging. Total revenue was down to £523.8m, from £601.1m in the equivalent period last year.

Like for likes in its core UK and Ireland market slid 7.4%. New Look attributed the sales fall to “ongoing consumer uncertainty and seasonal volatility”.

A half of two quarters

‘Sales are vanity, profit is sanity’, the old adage goes. But without sales there can be no profits, so how worrying is the slip in turnover?

New Look executive chair Alistair McGeorge says performance should be seen in the round. He points out: “A year ago we were in survival mode. There are a lot of changes we’re making, but the fruit isn’t all being shown in these results.”

New Look’s emphasis is now on “profitable trading”, says chief operating officer Nigel Oddy, who joined the retailer earlier this year.

New Look has gone from “trading for cash” when it was in financial crisis to building on foundations for a successful future. The expectation is for a better second-half performance from more profitable revenues.

“Many of the programmes now in train at New Look could not be expected to be delivering a total turnaround yet”

The management can take some comfort from the detailed picture of first-half sales, which, Oddy says, show a “half of two quarters”. The like-for-like decline slowed from 10.1% in the first quarter to 4.6% in the second.

The latter figure might have been better had it not been for a warm September, which hit fashion retailers across the board – a factor highlighted by Next last month.

Next’s September full-price sales growth was only 1%, while in October the figure rebounded to 5%.

Oddy says, however, that at New Look, October “continued to be challenging” but “it’s difficult to get a true comparison” because of last year’s desperate straits and the present political and economic volatility.

It is certainly true that many of the programmes now in train at New Look could not be expected to be delivering a total turnaround yet.

‘There’s a lot going on’

Oddy only took up his role in April. The retailer was not in a position to be able to hire him last year, nor any other new senior team members such as central merchandising and supply chain director David Wertheim, who joined last month after working for Jack Wills. They should all have a greater impact on the business in the coming months, and more appointments are likely.

Changes such as selling through Next and eBay, the introduction of concessionaires such as Hallett Retail and the reduction of lead times will not transform New Look’s fortunes overnight, though there are signs of success. Smaller stores that were invested in delivered a “strong” like-for-like performance in comparison with the rest of the store estate, for instance. 

“Consumer confidence has been at a low since the Brexit vote. The upcoming election is not doing anything to help. We need some certainty”

Nigel Oddy, New Look

“There’s a lot going on. We now have a product mix that that represents our customer base and differentiates us from the competition,” maintains Oddy.

It is true too, however, that New Look – nor many other businesses – can expect any help from the retail market at present.

“Consumer confidence has been at a low since the Brexit vote,” Oddy observes. “The upcoming election is not doing anything to help. We need some certainty.”

All-out for Christmas

As far as Oddy is concerned, it’s now all-out for the best festive season possible. “It’s 42 days to Christmas,” he says. “We’ve got six weeks of hard trading, but we’ll get Christmas done.”

As New Look seeks to sustain a recovery, it needs a good Christmas more than some. It is right to focus on profitable sales and has put the building bricks in place to achieve them.

But it needs general sales growth in the longer term if a full recovery is to be achieved. The stabilisation of the business over the last 18 months gives it the chance to achieve that.

The retailer is taking the action it could and should, but the most brutal environment imaginable is making a turnaround all the harder.

Oddy and his team will hope, like many of their counterparts, December 12 will bring the certainty that gives consumer confidence a boost. And New Look’s focus on profit should buy the retailer more time if conditions do not improve soon.