New Look to close stores as it instigates CVA
New Look is planning to take an axe to its UK store estate and cut rental costs following a tough 2017 which saw a widening of losses and ended with poor Christmas sales.
It is instigating a Company Voluntary Arrangement (CVA) and seeking approval from creditors (due later this month) on its plan. New Look has identified 60 out of its total 593 stores in the UK for potential closure, alongside a further six sites which are sub-let to third parties. The proposal also includes a reduction in rental costs and revised lease terms across 393 stores. There will be redundancies as a result, expected to be a maximum of 980 colleagues amongst the current UK staff base of 15,300 people. All efforts will be made to redeploy colleagues within the business where possible, New Look claims.
“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," says Alistair McGeorge, Executive Chairman at New Look. “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.”
Daniel Butters and Neville Kahn of Deloitte have been appointed as Nominees to the CVA. Butters comments: “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.”