Until 2010, New Look was one of fashion retailing’s winners, enjoying double-digit sales growth in five of the previous six years and consistently high operating margins
If the business had any trading Achilles’ heels they were modest like-for-likes - although 2009/10’s figure was good - and falling sales densities. Moreover, there remains a debt problem, which two failed IPO attempts were intended to alleviate. In 2010/11, though, UK sales fell for the first time, by 3%, with like-for-likes down 7.1%. Operating profit fell 43% while group pre-tax profit disappeared.
What went wrong? After chief executive Phil Wrigley left in 2008, New Look lost competitive edge and fashion flair, failing - despite recession - to sustain its strong, relevant reputation for good value, fast fashion basics. Its ever-widening ranges were criticised for lacking depth and targeting too young a customer, while price points crept up. Establishing a creative base in central London in late-2009 - part of New Look’s aspirations of global status - added greatly to short-term pressures.
Singh’s merits and record are well known - Retail Week’s recent fond profile (April 1) renders unnecessary the listing of his many attributes. However, on too many occasions now the company has relied on him to steady the ship and reset it on course. This cannot continue to be the corporate backstop indefinitely in troubled times, however well it works. There will soon be a succession issue now he is into his 60s and a time when New Look’s new horizons will need formulation and implementation by others, without benefit of his undoubtedly wise counsel.
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