New Look made an annual operating loss of £152.5m, compared to a £76.4m operating profit in 2017, as a result of “challenging, promotion-led markets in the UK and Europe, the continuing decline in UK high street footfall due to weakening consumer confidence, and the loss of focus on its core customer.”
Adjusted EBITDA for the year to 24 March at the struggling retailer decreased by £165.7m to a £10.7m loss for the year.
The business made an underlying operating loss of £74.3m.
Gross profit declined 18% to £612.1m, with the resulting gross margin declining to 45.4%, down from 51.3% in 2017.
Revenue at the business fell 7.3% to £1.3bn. New Look brand sales fell 11.4% year on year.
UK like-for-like sales for the year fell 11.7%. Own website sales dropped 19.2%, while third party online sales were up 15.5% compared to 2017.
During the period administrative costs increased 14.1% to £764.6m and operational exceptional items increased by £24.7m to £28.2m, largely due to the costs of its cancelled head office relocation, costs incurred as a result of the Company Voluntary Agreement, which was approved in March 2018, plus costs associated with dual running of certain contracts and aligning operations to its strategic plan.
New Look said “significant progress” had been made during the year to deliver “financial and operational stability” that will be reflected in FY19 and beyond
The business said it had returned to a value-led fast fashion and wardrobe basics offer with a full price focus; it had lowered prices to offer “significantly better value”, with 80% of product to retail under £20; and the supply chain had been “fundamentally realigned” with increased flexibility in the buying model, faster trend reactions and improved speed to market.
New Look added that pricing was now aligned across store and online channels and it had simplified store layouts for customers.
The retailer said £34.2m of one-off costs, including stock clearance, were incurred during the year to enable a clean trading position for the current financial year.
The approval of the CVA should deliver around £40m in cost savings and an additional £30m annual cost savings have already been implemented relating to marketing expenditure and delivery costs, reduced inventory shrinkage and efficiency improvements across the business.
In relation to current trading the business said its “liquidity position continues to improve, and early Q1 trading indicates improvements in specific womenswear areas where initial attention has been focussed.”
Alistair McGeorge, executive chairman, said: “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.”