New Look has improved its financial and operational stability during its first quarter, with underlying profit surging thanks to a product review amid an ongoing major restructure.
For the 13 week period ending June 23, the fashion retailer’s revenues fell 2.7 per cent to £329.4 million but underlying operating profit jumped 19 per cent to £14.4 million.
While like-for-likes for New Look brand sales also dropped four per cent, this was an improvement on the 8.2 per cent plunge recorded in the first quarter last year.
Meanwhile, New Look said its adjusted EBITDA stabilised and was up 1.5 per cent to £27.6 million, which it said was supported by cost savings.
The results come after the retailer launched a CVA in the UK and swung to massive operating loss of £74.3 million during its last financial year.
The high street chain said its quarterly results were bolstered by improved sales and profitability in clothing areas thanks to a product review, with women’s clothing in UK stores outperforming the market by 7.4 percentage points according to the BRC.
In addition, in-store and ecommerce customer conversion rates improved, with click and collect sales mix increasing to 40 per cent year-on-year and driving footfall into stores.
Finally, New Look said its £70 million annualised cost savings were over-achieved during the quarter, and additional savings have been targeted.
“We previously said that our focus is to achieve financial and operational stability,” chairman Alistair McGeorge said.
“In Q1 we made good progress in stabilising profits and delivering on our cost savings plan, with encouraging green shoots seen in womenswear.
“We ended the quarter with a clean stock position and have seen improved sales performance in the areas we have addressed so far in our product review. We are confident there is more to come as we focus on our remaining product ranges.
“As we recover the broad appeal of our product, we were pleased to improve our market performance and deliver better customer conversion rates. This shows the strength and resilience of our brand, and the positive impact of the changes we are making.
“Our turnaround plans continue, and we will deliver further operational efficiencies whilst maintaining our resolute focus on our core strengths and heartland customer to ensure we remain on the right track.”
New Look’s CVA forms part of McGeorge’s turnaround plan and involves a u-turn from the strategy set by former chief executive Anders Kristiansen.
It includes plans to shut down 60 stores, affecting 980 jobs, as well as slow down its expansion across China.