Profits at value fashion chain New Look have soared by 30%, despite wider high street gloom.
According to The Sunday Telegraph, New Look’s like-for-like earnings before interest, tax, depreciation and amortisation rose to £61.1m compared to £41m for the same period last year.
The disclosure was made to the chain’s debt holders last week.
New Look’s strong performance is attributed to new store openings, reducing costs and a new merchandising strategy.
Speaking to the newspaper, New Look chief executive Alistair McGeorge said the chain was “on track to hit an ambitious £189m EDITA target for the end of March next year”.
The boost in profits has pushed trading in the chain’s £717m payment-in-kind (PIK) note from 54p in the £1 to 62p in the £1.
PIK is a high-risk load that increases in interest every year. The increase in earnings means that New Look’s private equity owners Permira and Apax could buy back the loan to reduce its debt burden.
But McGeorge said he did not expect them to make a “meaningful purchase”.
“This company still needs to be refinanced in order to sort out the problems in its capital structure,” he said.