New Look chief executive Carl McPhail and chief finance officer Alistair Miller share their views on the trading prospects in 2009.
New Look’s like-for-like sales were up 2.8% for the 14 weeks ended January 3, a great performance looking at some of your competitors. What do you put this down to? Product, price or your trading stance?
Carl McPhail:It was a combination of all three. Fashion and value is at the core of what we do and the team did a great job in a really tough market. We have worked harder at keeping our stocks very tight and we’ve invested heavily in design to focus on key items which sell in volume through the chain, for instance our £10 checked shirt, our £18 satin puffball dress and a £50 leather bomber. We’ve sold 104,000 satin dresses across six colours and in a two week period, we sold 40,000 units of checked shirts.
We’ve traded ahead of the market and we’ve seen real growth in market share. We traded as we always do and stayed prime and at full margin and we’ve seen the benefits of that.
Market share is up, who are you stealing customers from?
Carl McPhail:It’s always difficult to say. But looking broadly at the middle market, an average shopping basket at New Look is around 20% to 30% cheaper. We’re focusing on how we are growing market share in categories though. We are the market leaders on footwear and denim.
What are your expectations for 2009? Can New Look continue to outperform?
Carl McPhail:We see the market as being really quite tough but with our credentials of fashion and value we will continue to hit the nail on the head. We are not complacent though. We will stay really close to our consumer.
What is the likely impact of the weakness of sterling on prices towards the second half of the year? How are you addressing the currency issue?
Alistair Miller:We are hedged on the dollar until summer this year and we have some hedging at reduced rates through to November. There will be increasing cost and margin pressures in the second half of 2009. If the exchange rate stays at the current level it will be very difficult for retailers to absorb that. We have taken some steps to mitigate the effects - we’ve moved some sourcing from Chine to India and Bangladesh and North Africa. Also, China now has excess capacity so we are negotiating with factories for better deals.
Will you be cost cutting like so many of your competitors in 2009?
Alistair Miller:We will be keeping a tight grip on costs but we are a value business which means we have always run as efficiently as possible. We will be looking at ways to drive out inefficiency but we are still growing as a business. In the last 12 months we have taken on 2,500 additional people.
Will you be reining in expansion or focusing on overseas growth in the downturn? Do you see any opportunities in this market?
Alistair Miller:We will continue to expand in both the UK and overseas. We put on 350,000sq ft of space this year. That will slow a bit this year to around 250,000sq ft, largely as a result of developers moth-balling new centres and schemes. We will be keeping some money in reserve to take advantage of things that might happen this year.
What will be spring’s big trend winners?
Carl McPhail:We can’t share that! We have had a very positive reaction to spring and interim product that has gone in store or which went in just before Christmas. We’ve got more spring stock in than we had this time last year and we have had a better reaction to it. We’ll be looking to exit Sale a bit earlier dependent on how the market goes over the next few weeks.
To read all the details of New Look’s strong Christmas trading performance see New Look emerges as Xmas Winner.