New Look has written to suppliers to inform them it will be cancelling all orders and pushing back payment terms “indefinitely”, to ease the impact of the coronavirus outbreak.
A letter from New Look CEO Nigel Oddy, seen by Drapers, says: “Myself and the board request the following measures, with immediate effect: all existing spring/summer orders for which New Look has not taken ownership are cancelled – for example, orders that are in production, in origin or at port but not yet loaded on to a vessel.
“In assessing what is in New Look’s best interests given current circumstances, New Look has concluded that, in this time of great uncertainty, it does not intend to pay you for any costs, including any costs for fabric and raw materials, in connection with any cancelled orders.”
It adds: “Any outstanding payments that are due in connection with orders for which New Look has taken ownership – for example, orders that have been accepted and are in transit, are in our distribution centre, or in our stores – shall be delayed indefinitely until we see an improvement in trading and in our cash position.
“Should you wish to reclaim possession of such orders, we would, of course, be happy to make them available to you for collection at our distribution centre. Again, this is a matter of survival for New Look and is our assessment of the measures that need to be taken at this time of severe market dislocation due to factors outside the control of enterprises, organisations, and individuals.”
Oddy confirmed New Look is addressing all other areas of expenditure within the business in order to minimise the cash impact of the Covid-19 outbreak, such as seeking rent holidays, deferring tax payments, and assessing employee costs and allocation of resources.
A New Look spokeswoman said: “We, like many other retailers, are having to take difficult and necessary actions to try to mitigate the impact the Covid-19 outbreak has on our colleagues and business. Whilst our online sales channels remain open, albeit on a significantly reduced basis, we have regrettably had to inform suppliers that we cannot place new orders until further notice and will be temporarily postponing outstanding supplier payments until the situation improves.
”We have not taken this decision lightly and have only done so out of absolute necessity given the exceptional circumstances we are in. We greatly value our relationships with suppliers and are actively identifying opportunities where they can hold product for use for autumn-winter this year or spring-summer next year.”
Drapers revealed on 23 March that New Look had put a halt on all current and future production, and is offering thousands of employees unpaid leave.