New Look has pledged to slash its prices as part of its turnaround strategy as it reveals its first set of annual results since the business entered a CVA (Company Voluntary Arrangement) in March.
The high street retailer, which is in the process of culling 60 of its 600 stores as part of the CVA process, said it would shift its pricing architecture to ensure that 80% of its product would be priced under £20 as it attempts to lure back lost customers.
In the year to 24 March 2018 revenue at the retailer fell -7.3% to £1.35bn. New Look brand like-for-likes were down -11.7% while its online sales plummeted -19.2%. The one bright spot in the numbers was a 15.5% increase in third-party online sales.
An adjusted EBITDA loss of £10.7m was recorded (including £34.2m of one-off costs) along with an underlying operating loss of £74.3m.
As well as the closure of 10% of its stores, New Look is hoping that slashing its prices will also help to revive its fortunes along with a “fundamentally realigned” supply chain offering increased flexibility in its buying model, faster trend reactions and improved speed to market.
Establishing a reputation for value will mean the retailer can be focused on selling more full-price product, it said. It is also seeking to improve online customer journeys as well as those in physical stores with more simplified layouts.
Executive chairman Alistair McGeorge, who was brought back to the business six months ago to execute the turnaround, said a number of actions had been taken which will reap rewards in the next financial year. The £34.2m one-off costs were incurred as it sold off old stock to enter the new financial year in a clean stock position and some £40m of savings had been realised by “addressing [the] over-rented position of [its] UK store estate”.
An additional c.£30m of annual cost savings had already been implemented relating to marketing expenditure and delivery costs, reduced inventory shrinkage and efficiency improvements across the business.
“Last year was undoubtedly very difficult for New Look, with a well-documented combination of external and self-inflicted issues impacting our performance.
“Since November, we have focused on making the necessary changes to get the company back on track and reconnect with our customers. Our turnaround plan is now well underway, and we have already made substantial operational improvements to help stabilise the business, reduce our fixed cost base and put us in a better position to drive future full price sales.
“We have started the new financial year with a much cleaner stock position and are now seeing green shoots emerge.
“We still have more work to do to restore long-term profitability, but I am confident we are now better placed to achieve this than we were when I returned to the business over six months ago. Trading conditions will remain tough in the year ahead, but further operational efficiencies and a resolute focus on our core strengths and heartland customer will help to ensure we remain on the right track,” McGeorge said.