New Look wins creditors' support for store closure plan
21 March 2018, 16:08
New Look's plan to close 60 stores and cut up to 980 staff as part of a rescue package has received overwhelming support from its creditors.
Sky News has previously reported how the struggling fashion retailer had sought a so-called Company Voluntary Arrangement (CVA) that would allow it to slash costs including high rent bills, given a "challenging" retail environment.
It said on Wednesday that 98% of creditors and landlords had accepted the proposals.
Under the plans 60 under-performing stores, including six further sub-let sites, are expected to close within the next year.
The retailer said rent reductions and revised lease terms of up to 55% had been agreed at another 393 of its 593 stores.
New Look, which has 15,300 UK staff, said it would attempt to redeploy many of those at risk of redundancy.
It is the latest big high street name to seek help following the demise of Toys R Us and Maplin last month.
This week has seen Carpetright and Mothercare's finances come back into focus while Moss Bros was another brand to report trading troubles amid consumer caution that has hurt spending and economic growth this year.
Earlier this year, New Look revealed a nine month pre-tax loss of £123.5m - with like-for-like sales in the UK down almost 11%.
CVAs are aimed at helping not only New Look reduce costs but also protect creditors from getting less - or nothing - if the retailer's problems were to get worse.
Toys R Us UK and BHS are among chains to have used them in the past - only to fall later.
New Look's executive chairman, Alistair McGeorge, said: "In order to help restore long-term profitability, it is clear we need to reduce our fixed cost base.
"We are therefore pleased to have gained the support of our creditors to address our over-rented store estate.
"Launching a CVA has been a tough decision and our priority remains keeping all potentially affected colleagues informed during this difficult time.
"The CVA is one of a number of necessary actions we are taking to get the company back on track. In addition to implementing other cost-saving initiatives, we are already focusing on driving future full price sales by realigning our pricing to offer significantly better value, adding flexibility to our buying model, and improving our speed to market.
"Additionally, we have further strengthened our alignment between e-commerce and stores.
"New Look is a great brand and today represents another important step in helping to rebuild our position within the UK market."
:: The stores slated for potential closure are: Aberdeen - Bon Accord; Beckton; Bolton Mens; Borehamwood; Brynmawr; Burton Mens; Cameron Toll; Cardiff - Queen Arcade; Cheshunt; Clevedon; Craigleith; Doncaster Mens; Dundee - Wellgate; Exeter Mens; Fleet; Gateshead - Team Valley; Glasgow - Buchanan Street Mens; Gorleston; Hanley Mens - Intu Potteries; Hounslow Mens; Hull - Whitefriargate; Keynsham; Kingswood; Leeds - The Core Shopping Centre; Leicester - Haymarket; London - Marble Arch; London - Moorgate/ London Wall; London - Oxford Circus; Maidenhead; Maidstone Mens; Merry Hill Mens; Metro Centre - Mens; Monmouth; Newport Mens; Newton Mearns; North Shields; Nottingham Mens; Ocean Terminal; Peterbrough Bridge Street; Pontypool; Portswood; Ramsgate; Reading - Broad Street; Reading Oracle Mens; Rhyl; Romford Mens; Rugby; Shrewsbury Mens; Sidmouth; Stockport - Merseyway; Stockton-on-Tees; Stratford Upon Avon -Bridge Street; Thornaby; Tonypandy; Torquay - Union Street; Tredegar; Troon; Wallsend; Weston Favell; Wigan Mens.
(c) Sky News 2018: New Look wins creditors' support for store closure plan