Shoppers are returning to New Look stores as restrictions ease, but the high street fashion warned yesterday that it may not survive another lockdown without more government support.
New Look’s future is on firmer footing after landlords lost their challenge to the retailer’s company voluntary arrangement in May. Nigel Oddy, 61, its chief executive, said that it could now “look to the future with confidence”.
New Look recorded a £108 million pre-tax profit for the year to March 27, compared with a £430.7 million loss in 2020, after its CVA allowed it to shift stores to turnover-linked rent. This meant that its estate has become significantly less burdensome and that it could halve the £356 million impairment charges it had accounted for previously.
The return to the black, on a statutory basis at least, comes despite New Look’s total sales tumbling by 40 per cent to £542.2 million on the back of store closures and adjusted earnings before interest, tax and other charges sliding by 96 per cent from £132.2 million to £4.3 million.
Its accounts reveal that the retailer’s base-case scenario is for sales to recover to 84 per cent of pre-pandemic levels this year, which would allow the business to meet its liquidity and covenant targets. However, New Look cautioned that if there were to be further lockdowns, resulting in store closures and no government support above the existing furlough support, this meant a “material uncertainty that could cast significant doubt on the group’s ability to continue as a going concern”.
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The warning came despite signs that recent trading had improved, with total sales jumping by 181.7 per cent to £194.4 million during the 13 weeks to June 26. Online sales improved by 3.8 per cent compared with the previous quarter and by 43.3 per cent compared with last year.
“We have been delighted to welcome our customers back to our stores since reopening from April 2021, which, as expected, has driven strong sales growth,” Oddy said.
New Look is the market leader for womenswear in the 18-to-44 age range, according to Kantar data. It was founded in 1969 and still has 450 shops in the UK and Ireland after closing more than 50 in the past couple of years.
