New Look plans to up the quality of its offer to compete with mid-market retailers rather than vie with Primark on price, its new chief executive has said.
Chief executive Anders Kristiansen, who joined in January, said: “Primark competes with everyone but we need to be different. We need to have the latest fashion and a better product. We don’t want to compete head to head, we have to be confident with what we’re doing.”
Although the quality of product will be improved, Kristiansen said there would be “no change” to New Look’s pricing strategy, with an average dress costing around £18.
He was speaking as the retailer revealed a 4.9% increase in group sales for the 13 weeks to June 29, despite the coldest spring for 50 years. EBIDTA was up 13.1% for the quarter.
Like-for-like sales remained largely flat, increasing 0.3%, while own-brand sales edged up 1% from last year.
Kristiansen said he was pleased with the results so far but would not be “complacent” about New Look’s position.
“We have our sleeves rolled up and are ready for autumn,” he said.
“We are very pleased with the numbers so far in the second quarter as the weather was with us.”
New Look also revealed it is making progress with its three-point turnaround plan of cost savings, margin improvement and revenue growth.
In April the retailer announced it was attempting to reduce its debt burden through an £800m bond issue. The successful refinancing allowed it to push back the point at which the debt must be paid from 2015 to 2018. It is hoped this will give the business time to stabilise and grow.
Chief financial officer Alastair Miller said New Look was on track to reduce its number of UK stores by about a sixth.
He explained: “It’s a continuous programme taking place over the next three to four years where we will reduce the total number of stores to 500 from the current 590. In the next 12 to 18 months, 20 stores will be closed across the country, depending on where leases expire.”
New Look is also moving ahead with Chinese expansion plans, with a team in place ahead of the opening of its first Chinese store in Shanghai next March. Kristiansen said Russia, Poland, Germany, France, Belgium and Holland were top of the list for further expansion.
New Look has 1,100 stores across the UK, Europe, the Middle East, Singapore, Indonesia and Russia.