New Look has defied tough consumer spending conditions to report a 30% increase in profit.
New Look generated like-for-like EBITDA of £61.1m year-to-date to August 2012 compared to £47m over the same period in 2011.
Sources said the company is narrowly behind its year-to-date August 2012 budget of £66.6m.
New Look executive chairman Alistair McGeorge said the retailer is on track to hit his target of £189m EBITDA by the end of March next year, The Telegraph reported.
The retailer’s upturn is in stark contrast to previous performance. Profits fell from £36m to zero over the year to March 26, 2011 after poor trading.
New Look made its statement on profits to debt holders. The profit improvement had pushed trading in its £717m payment-in-kind (PIK) note up from 54p in the £1, to 62p in the £1, the retailer said. The PIK note is a high-interest debt tool that rolls up interest every year.
New Look’s private equity owners Permira and Apax will be allowed to buy back the controversial PIK, helping to reduce the debt burden, as a result of the improved earnings performance. However, McGeorge said he did not expect either Permira or Apax to make any meaningful PIK purchases.
He said: “It is good that they are now allowed to buy back the PIK. But they won’t do it in any meaningful amount and it won’t really make a difference. This company still needs to be refinanced in order to sort out the problems in its capital structure.”
New Look restarted its search for a new chief executive last month after ditching the process for seven months.
The retailer has been without a chief executive since the departure of Carl McPhail in March 2011.
Earlier this year, New Look agreed a deal with lenders to extend the maturities on its £1.1bn of debt until April 2015.