// New Look begins sales process of its store estate in France
// It’s part of its wider turnaround strategy, which features exits from overseas markets
// Follows New Look exiting China and Belgium
New Look has officially launched a process to seek new owners for its stores in France as part of a major turnaround strategy that includes steps to leave international markets.
It comes after the retailer appointed Paul-Henri Cécillon, chief executive of corporate turnaround specialist Phinancia, to assess the state of the business of New Look France last November.
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- New Look could put itself up for sale as bondholders take control
- New Look’s Belgium arm files for insolvency
- New Look pursues debt-for-equity swap after lacklustre Christmas
- New Look slugged with downgrade from Moody’s
- New Look mulls extra store closures on top of 60 earmarked under CVA
A spokesperson from New Look has told Retail Gazette that it has now started the process to find new investors to takeover its estate of 30 stores in France.
While it is not yet known how many employees will be affected, New Look said it was working to support French employees and confirmed that its French stores would continue to operate as usual for the time being.
The fast fashion retailer has been present in France since 2006 and employs just under 500 people.
According to figures reported by Fashion Network, New Look’s financial performance in France has declined in the last three years, and much more so in the last few months amid the “yellow vest” demonstrations on various weekends between November and January.
The retailer’s French sales fell by 13.6 per cent for the 2017-18 financial year, down to €57.9 million (£49.7 million) compared to €67 million the year prior.
“We can confirm that a process has been launched by the executive committee of New Look France to seek potential investors for its 30 stores in France,” a spokesperson for New Look told Retail Gazette.
“As previously disclosed, trading in France has remained challenging, and New Look Group has been conducting a review of its international strategy as part of its wider financial restructuring to ensure the company is well positioned to drive strong business performance and profitable growth in the future.
“New Look France is working with the local Works Council and employee groups to support employees at this time.
“During the process, stores will continue to operate as usual and an announcement will be made in due course as appropriate.”
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 out of a target of around 100 stores in the UK, while completely withdrawing from the Chinese and Belgian markets.
New Look had 120 and six stores in China and Belgium respectively. It still has a presence in Poland.
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 swap will eventually lead to capital raise of £150 million.
New Look said that it has so far achieved £78 million in annualised cost savings.
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 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.
The retailer also highlighted that in the 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.