New Look’s profits took a bit of a hit in its third quarter, with the fashion chain attributing the dive to an “extremely challenging” market.
The retailer’s profit before tax stood at £30.1 million in the 13-week period to December 24, a 37.6 per cent dip compared to the previous quarter’s £48.2 million.
While third quarter revenue went up by 0.8 per cent from £419.3 million to £422.6 million, UK like-for-like sales fell by 4.7 per cent and for the 39 weeks of the year to date revenue across the company was down by 2.9 per cent.
Group like-for-like sales was also down by 4.6 per cent for the third quarter, and down by seven per cent for the year to day.
READ MORE: New Look boss pockets £2.2 million bonus
Meanwhile, New Look’s underlying operating profit for the third quarter came in at £52.2 million, a 26.1 per cent drop compared to the previous quarter’s £70.6 million.
For the year to date, the retailer racked up £111.5 million in underlying operating profit, a 32.6 per cent drop compared to the same period the previous year when the retailer recorded £165.4 million.
The retailer’s adjusted EBITDA for the third quarter was £66.9 million, a 19.7 per cent slump from the previous quarter’s £83.3 million. For the year to date, adjusted EBITDA was down by 25 per cent, from £205 million to £153.8 million.
Despite the challenging financial quarter, one aspect of New Look that has done well its own website sales. In the third quarter, this grew by 18.2 per cent, and 12.9 per cent for the year to date.
In addition, New Look has continued to expand internationally and just opened its 100th store in China.
“The UK market has continued to be extremely challenging, with reduced footfall and a highly promotional environment on the high street, resulting in a disappointing like-for-like sales performance,” chief executive Anders Kristiansen said.
“Despite this, total sales for the quarter were level as a result of good performances outside the UK, online and in menswear, proving that our strategy of diversification is the right one for our business.
“It remains key to our growth to continue to diversify our offer and to invest in our priority international markets.”
Kristiansen went on to add that the consumer mindset was “shifting”, thanks to social media and a “buy now, wear now” mentality.
“We have responded accordingly by improving our buying processes, working to achieve a faster supply chain, tightening our stock control and strengthening our buying and design teams to deliver a stronger product proposition,” he said.
“We are clear on the actions needed to capture customer spend, but these will take time to implement. While we expect 2017 to be tough and are setting our plans accordingly, we strongly believe in our ability to continue to execute our strategy.”
New Look said it expected the challenging retail conditions to continue well into 2018.