New Look is reportedly drawing up plans for a Company Voluntary Agreement (CVA) after its insurers cancelled cover to its suppliers.
According to Sky News, the fashion retailer is allegedly putting together a plan to close around 10 per cent of its stores and restructure its finances with a CVA.
Although sources have stressed this was just one of a number of options being considered by the retailer, it adds weight to speculation that New Look is in financial straits.
Should such a plan be approved by shareholders in the coming weeks, around 60 of its 600-strong store estate would be abandoned, while calls will be made for rent reductions on the remaining properties.
A spokesman for New Look has declined to comment after being approached by Retail Gazette.
This follows revelations earlier this week that leading credit insurer Euler Hermes had stopped issuing insurance to New Look’s suppliers, in a move that suggests it had lost confidence in New Look’s ability to avoid insolvency.
Late last year, New Look axed hundreds of jobs while reporting an underlying operating loss of £10.4 million in the six months to September 23, compared to the £59.3 million profit recorded in the same period last year.
Concerns have also been raised about New Look’s relationship to embattled South African company Steinhoff, which owns Poundland, Harveys and Bensons for Beds in the UK.
Christo Weise, Steinhoff’s largest shareholder who recently stepped down as chairman and interim chief executive, also holds the largest stake in New Look’s parent company Brait.