New Look comeback continues, no profits yet, but losses shrink

By

Sandra Halliday

Published
Feb 11, 2020

New Look gave us more evidence of its slow climb back to health on Tuesday as the company released its latest results, for the first nine month of its financial year. It still made a loss, but it’s tantalisingly close to the break-even point. Its statutory loss before tax was £1.2 million, a radical improvement given that the same figure a year before had been £83.2 million.

Its revenues fell to £830.1 million from £930.4 million, but that reflected its reduced store base after a major store closure programme, as well as reduced markdown activity. The bottom line is that it has shed the stores that were the biggest drain on its results and its store estate is in much better shape now.

That said, it wasn’t all good news as UK and Ireland like-for-like sales fell 7.1%, “reflecting ongoing consumer uncertainty and seasonal volatility”. But based on British Retail Consortium figures, in Q3 alone, it beat the overall market by 2.1 percentage points.

And the company said it outperformed its target market in stores and gained 0.3 percentage points market share in the key 18-44 age group (by value and in-store), maintaining its number two position with this demographic.

It all meant its adjusted EBITDA was £78.6 million in the year so far, with the specific Q3 performance being “level" year-on-year at £36 million.

The company said its general operations are improving with good stock control and a 24% reduction in units, as well as improved product gross profit. It also boosted its speed to market with total lead times reduced by nine days versus FY19.

And it has rebalanced its mix so that what it calls ‘core’ and ‘broad appeal’ clothing categories represent 98% of that mix against 75% of it being ‘trend’ and ‘fashion’ last year.

And the company continues to add to its leadership team with Nigel Oddy, who became CEO at the start of this year, also naming ex-Bonmarché chief Helen Connolly as its Chief Commercial Officer this month and Clare Dobbie as Chief Customer Officer at the same time.

Meanwhile, as far as stores are concerned, the company’s 915 girls’ clothing range and 42 concessions have been rolled out across its former Menswear store spaces. And its‘Revive’ investment programme for smaller stores (49 to date) has delivered a “strong return on investment”.

Oddy said of all this that the firm “delivered a robust third-quarter performance given the tough market conditions, as we maintained good control over our stock and costs, reduced markdown activity, and our stores outperformed our target market”. 

He added that since moving from COO to CEO in January, his focus has been “to accelerate our transformation plans and ensure we recover the broad appeal and good value cherished by our customers”.

And what about the future? The company didn’t give a detailed forecast, but said: “Q4 will be characterised by early spring trading in late February and March. We have confidence in our offering but remain cautious of the challenging market environment and consumer sentiment. Looking further ahead, our improved product range, enhanced lead times and omnichannel offer means we are well positioned as we focus on driving profitable sales.”