// New Look’s like-for-likes down 2.3%, an improvement on last year’s 10.7% plunge
// UK like-for-likes for the third quarter up 0.9%
// Struggling retailer also swings to underlying profit of £38.5m
New Look’s ongoing turnaround scheme has continued to bear fruit with signs of improvement in like-for-like sales and a return to profit.
In its trading update for the year to date for the 39 weeks to December 22, New Look said like-for-like brand sales fell 2.3 per cent, which it said was a third consecutive quarter of improvement in like-for-likes and compares to the 10.7 per cent plunge recorded in the same period the year prior.
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The fast fashion retailer also highlighted that in third quarter, which included a fair chunk of the crucial Christmas trading period, UK like-for-likes lifted 0.9 per cent.
Meanwhile, underlying operating profit swung to £38.5 million, compared to an underlying operating loss of £5.1 million for the previous year-to-date period.
New Look first returned to profitability amid its half year report, when underlying profits for the 26 weeks to September 22 came in at £22.2 million, up significantly from a £10.4 million loss the same period a year earlier.
However, revenue for the year to date fell five per cent to £1.01 billion, compared to £1.06 billion the previous year, but New Look said this was in line with expectations “given the focus on driving more profitable sales”.
Adjusted operating profit for New Look’s core UK and Ireland markets skyrocketed 75 per cent to £97.7 million for the year to date, which the retailer said was supported by cost savings.
Overall adjusted operating profit surged 78 per cent to £78 million for the same period.
The news comes as New Look pushes on with its wide-reaching CVA scheme, which includes a restructure and hundreds of job cuts from a dramatic downsizing of its store estate.
It has so far closed around 85 stores and completely withdrawn from the Chinese and Belgian markets.
After reportedly having a poor Christmas period, in January the fast fashion chain launched a debt-for-equity swap, a painful refinancing process where majority ownership was handed to bondholders in a bid to cut debt from £1.35 billion to £350 million.
The debt-for-equity has since led to a capital raise of £150 million and £80 million in interim funding.
New Look said that it has so far achieved £78 million in annualised cost savings.
“Today’s results show that we continue to make good progress in delivering improved operational and financial stability despite the challenging retail environment,” New Look chairman Alistair McGeorge said.
“Our return to broad appeal product continues to enhance profitability, our supply chain lead-times have improved, and we have exceeded our planned cost savings.
“However, we have more work to do and our focus is now on accelerating our turnaround plans.
“Central to this is finalising our financial restructuring, which will secure the future and long-term profitability of the company.
“The proposed restructuring has provided our colleagues and suppliers with renewed confidence, which will benefit the company at every level.
“The right capital structure and a materially deleveraged balance sheet will provide us with the financial flexibility to better attack our future amid challenging market conditions.
“Upon completion of the restructuring, our focus will be to further enhance profitability by continuing to provide fantastic product for our customers, building brand equity and grasping new market opportunities.”