New Look chief executive Anders Kristiansen is reversing plans to reduce its UK store count, saying there is an opportunity for expansion.
However, while presenting the company’s annual results this week, which showed an improvement in sales and profit, Kristiansen indicated there would be net openings this year. He said only 18 loss-making stores would close.
“I see opportunities for us to take more space in the UK, potentially through new stores or potentially getting more space in cities where we are under-represented,” he said.
Kristiansen highlighted Taunton as a town with a well-performing store that New Look would double in size “if we could”. Manchester was also under-represented, he said. The company is taking a unit in the long-awaited Westfield Bradford development. No further details were available.
As previously revealed by Drapers, he confirmed New Look could convert some stores into menswear-only formats, but said the “first step is to get the range 100% right”. Autumn 14 was only “70% to 80% there”, he added.
He went on to note “ecommerce sales drop significantly” in areas where stores are closed. This was another reason for not reducing the store portfolio when other retailers, such as Arcadia, are actively doing so.
Kristiansen, who will not take a bonus, said he was encouraged by New Look’s performance for the year to March 29. Underlying operating profits were up 11.3% to £128.5m, while group sales climbed 3% to £1.53bn.
UK like-for-likes rose 3%, compared with a 0.5% decline in 2013, despite a quarter of its stores being affected by the flooding in February.
Group like-for-likes were up 2.2%, against a decline of 0.7%, while ecommerce rocketed 63.9%, up on last year’s 45.8% increase.
New Look posted a gross profit of £805.9m as a result, up on 2013’s £785.1m, with group adjusted EBITDA up 5.8% to £200.2m. During the period, it paid off £40m of its high-interest debt, leaving £1.16bn as of March 29. A further £40m has been paid off since the financial year ended.
The retailer, which opened five stores in China during the period and has opened a further five so far this year, said it was “delivering against strategic goals of international expansion and multichannel growth”.
However, it made a statutory pre-tax loss of £55m compared with a pre-tax profit of £3.1m last year, due to a £64.2m impairment charge after writing down the value of its struggling French chain Mim.
Kristiansen said he was looking to sell Mim, although after a series of improvements it is now performing above budget so there is no urgency to finding a buyer.