Just over two years ago Alistair McGeorge took charge of a battered and bruised New Look.
Profits had plummeted, there seemed to be a revolving door as senior staff exited and once loyal shoppers were turning their backs on a retailer that used to be queen of the value sector.
It is a very different story today when McGeorge unveiled a return to the black by a reinvigorated New Look.
“When I came here, I think you viewed us as a no-hoper,” he told journalists. “We didn’t have much of a future, were totally over-leveraged. It was only a matter of time before some other people owned us, either through breaking a covenant or through our inability to refinance.”
McGeorge is quite simple in his view of what had gone wrong at New Look: bad management. “I’ve always thought this was a good brand. We didn’t execute well, whether it be cost, whether it be margins, whether it be shopfits.”
McGeorge started his turnaround by reconnecting New Look with its customers who wanted the retailer to return to its value roots.
Prices had drifted too high and products had become too youth-orientated which, since the average age of its customer was 31, had alienated a lot of its shoppers. The retailer has since then reestablished itself as a broad fashion church fand reinstated lead-in price points such as £12.99 dress to reinforce its value credentials. In fact, as a whole the retailer’s prices are down “a few” percentage points, according to McGeorge.
This shift has helped New Look better manage margins and markdowns have fallen from 33% to 26% of sales over the two-year period. New Look aims to improve the proportion to 20% in the year ahead.
Cutting costs has also been a priority. Chief financial officer Alastair Miller said efforts have been made to instil a very “cost conscious culture” across the business.
The retailer has been able to reinvest savings both into growth areas such as multichannel, where it has made great strides this year - there have been website improvements and a roll-out of click-and-collect - and areas in need improvement, such as tired looking shops.
So far, 145 of its 600 stores have been revamped and an additional £25m is earmarked for refurbishment in current year. With stores looking slicker and its product back towards its best, customers have steadily been heading back to the retailer as a 2% UK like-for-like rise in the second half shows.
Just as vital a part of New Look’s turnaround has been refinancing. McGeorge was right - most people were sceptical about the retailer’s chances of getting that off the ground. However it successfully completed an £800m bond issue to repay much of its debt earlier this year.
The fact investors were willing to back it shows McGeorge has restored faith in a business some certainly thought was doomed. Now that leaves its new management team, led by former Bestseller China boss Anders Kristiansen, able to concentrate on growth rather than covenants. Wiith China and Russia in his sights, the future looks brighter than it did two years ago.