New Look is plotting a further refinancing and aims to appoint a new chief executive before the end of 2012.
The retailer, which struck a deal to amend and extend its £1.1bn debt until 2015, is planning another round of refinancing to deal with its debt structure.
New Look chief financial officer Alistair Miller said: “We’ll have to find a bigger solution in the next 12 to 18 months which will be through a refinancing.”
In its current year, New Look has bought back £25m of payment-in-kind notes which Miller said was a “step in the right direction”.
The retailer is also understood to be nearing the end of its search for a new chief executive. An appointment is expected by the end of the year. Overseas candidates are understood to be in the mix for the position.
The retailer unveiled EBITDA growth of 25.2% to £86.9m in its first half to September 22. Miller forecasted it would make a small pre-tax profit in its current year. It made a pre-tax loss of £54.5m in the year to March 24, 2012, compared with break-even in the same period the previous year.
New Look executive chairman Alistair McGeorge said it had made a “good start” to its turnaround. However, UK like-for-likes dipped 3.1%, excluding VAT, and group like-for-likes slipped 3.3%. Total group sales dropped 1.7% to £710.5m. McGeorge said current sales performance was, however, showing year-on-year growth.
The retailer has focused on widening its offer which had gone “too young”, according to McGeorge, and lowering its price points.
Miller said it had invested “a couple of [percentage] points in price” in its entry price points, such as jeans for £9.99 and vest tops for £2.49, to promote its value credentials.
The price investment had improved the level of full price sales, McGeorge said. He added: “Overall sales are lower but we’re selling stock full price.”
However, he said the retailer had plenty of opportunity to “stretch prices” over the coming years.
Shrinking New Look’s store portfolio
McGeorge revealed that he wanted to shrink New Look’s store portfolio, however he said he imagined the retailer’s square footage would remain the same. He said: “We have 100 lease expiries in the next three years. In an ideal world we would have 450 to 500 stores with the same square footage.” The retailer currently has nearly 600 shops.
New Look has been eyeing sub-letting some of its store space to concessions such as Starbucks, however McGeorge said it had found “no national solution” so it is searching for local options.
It is also pushing ahead with its store refurbishment programme and will have revamped 140 shops by the end of the year. It has invested £28m into the programme which he said will start to payback in less than two years. The 62 stores it has revamped to date have experienced a 10% sales jump. It plans to revamp all 600 stores over the next three years.
New Look is also expanding its international business and will launch in China before the end of March. McGeorge expects the retailer, which currently has 210 New Look stores outside of the UK, to have a “very substantive” business in Russia, a “decent footprint” in China, and a presence in India in the next five years.