New Look has announced a company voluntary agreement (CVA) proposal that confirms plans to close up to 60 stores, reduce rental costs and potentially make up to 980 staff members redundant.
After weeks of speculation amid a slump in trading performance, the fashion retailer today announced its CVA proposal and will now seek approval from creditors on a plan to return the business to sales and profit growth.
As part of the CVA proposal, New Look has identified 60 out of its total 593 stores in the UK for potential closure, alongside another six sites which are sub-let to third parties.
Of the 60 stores earmarked for closure, three are in central London – including its Oxford Circus branch. (The full list of stores are listed at the bottom of the page)
New Look’s CVA proposal also includes a reduction in rental costs and revised lease terms across 393 stores.
Should the proposal be approved, New Look will be required to a maximum of 980 employees redundant.
However, the high street chain stressed that all efforts will be made to redeploy affected staff members – who are part of the earmarked stores for potential closure – within the business.
New Look added that the creditor approval on the proposal is due on March 21.
- New Look tipped to close up to 60 stores
- New Look’s UK & international managing directors exit
- New Look continues to suffer financially in “challenging” third quarter
- New Look bondholders appoint Rothschild amid worsening financial woes
- Former New Look boss Alistair McGeorge returns to the business
- New Look CEO to quit
In the meantime, it said all of its UK stores will remain open and operate as normal during the period of the proposal, and all staff will be paid as per usual.
New Look’s online sales channel will also be unaffected by the proposed changes.
Daniel Butters and Neville Kahn of Deloitte have been appointed as nominees to the CVA.
“Given our challenged trading performance and over-rented UK store estate, we are having to take tough but necessary actions to reduce our fixed cost base and restore long-term profitability,” New Look executive chairman Alistair McGeorge said.
“We have held constructive discussions with our key landlords and strategic partners and will now seek creditor approval on our CVA proposal.
“A priority for us is to keep all potentially affected colleagues informed during this difficult time.”
Butters added: “The retail trading environment in the UK remains extremely challenging, driven by weaker consumer confidence, the implications of Brexit and competition from online channels.
“New Look is an iconic brand on the high street and the CVA will provide a stable platform upon which management’s turnaround plan can be delivered.
“We have fully engaged with the British Property Federation and its members and their views are reflected in what we believe is a fair proposal to restructure the property obligations of the company.
“It is important to stress that no stores will close on day one, and employees, suppliers and business rates will continue to be paid on time and in full.”
New Look currently employs 15,300 people in the UK.
The CVA proposal comes after it was revealed last week that finance director Richard Collyer wrote to landlords to seek meetings to discuss possible store closures and rent reductions.
In the 39 weeks to December 23, New Look reported an underlying operating loss of £5.1 million alongside a loss before tax of £123.5 million.
This was compounded by a 10.7 per cent drop in sales in the UK.
There has also been an exodus of senior management staff since chief executive Anders Kristensen quit in September.
List of New Look’s UK stores that have been identified for possible closure:
- Aberdeen – Bon Accord
- Bolton (menswear store)
- Burton (menswear store)
- Cameron Toll
- Cardiff – Queen Arcade
- Doncaster (menswear store)
- Dundee – Wellgate
- Exeter (menswear store)
- Gateshead – Team Valley
- Glasgow – Buchanan Street (menswear store)
- Hanley (menswear store) – Intu Potteries
- Hounslow (menswear store)
- Hull – Whitefriargate
- Leeds – The Core Shopping Centre
- Leicester – Haymarket
- London – Marble Arch
- London – Moorgate/ London Wall
- London – Oxford Circus
- Maidstone (menswear store)
- Merry Hill (menswear store)
- Metro Centre – (menswear store)
- Newport (menswear store)
- Newton Mearns
- North Shields
- Nottingham (menswear store)
- Ocean Terminal
- Peterbrough Bridge Street
- Reading – Broad Street
- Reading Oracle (menswear store)
- Romford (menswear store)
- Shrewsbury (menswear store)
- Stockport – Merseyway
- Stratford Upon Avon -Bridge Street
- Torquay – Union Street
- Weston Favell
- Wigan (menswear store)