New Look, the value fashion chain, said that underlying profits slumped 40% and UK like-for-likes dropped 7.1% in its full year to March 26 as it suffered from “significant” disruption to the business.
New Look, which in March saw the departure of its chief executive and chairman and the parachuting in of founder Tom Singh, said that underlying operating profits fell from £162.7m to £98m during the year.
The poor performance from the 600-store UK business compared with a record year for New Look in 2010 when like-for-likes rose 5%. The retailer admitted that higher prices deterred shoppers.
“We allowed our price architecture to drift upwards, which undermined our competitiveness and relative value positioning in the marketplace.”
New Look chairman Alistair McGeorge
New Look’s international business put in a stronger performance, recording a 0.5% rise in like-for-like sales compared with a 12.4% drop in 2010.
Group adjusted EBITDA at New Look, which attempted an IPO in February last year, tumbled from £249.4m to £190.2m during the period while group sales were flat at £1.46bn. Group like-for-likes declined 5.5%.
A bright spot during the year was the retailer’s e-commerce performance which record a sales uplift of 41.4% to represent 4% of group sales.
New Look said a strategic review was under way to restore product and value architecture.
As well as contending with a string of high profile departures in recent months, New Look experienced a poor second half as it felt the full impact of the distruption caused to its buying and merchandising teams by the business’s head office move from Weymouth to London.
New Look executive chairman Alistair McGeorge, the former Matalan chief executive who was bought in to the business in April, said: “Clearly these are disappointing results, reflecting a business that was suffering significant internal disruption against a backdrop of a harsh and deteriorating consumer economy.
“Additionally, we allowed our price architecture to drift upwards, which undermined our competitiveness and relative value positioning in the marketplace.
He added: “This is a business with a strong brand and fantastic people and we are confident that we have put in place the right first steps to ensure New Look is returned to sustainable growth.”
The retailer said it would continue to roll-out its upgrade and refurbishment programme to its stores.
It added that it was the top retailer in value and volume terms for the under 35’s and the number two retailer in value and volume terms in women’s footwear according to data from Kantar Worldpanel for the 52 weeks ending April 17.
Arden analyst Nick Bubb said: “It’s a good job that New Look didn’t float in the spring of last year, as today’s finals make grisly reading, with EBITDA 24% down at £190m on the back of a 7.1% like-for-like sales decline.”
He added that he expected more “upbeat” talk about a recovery in the new year and said he hoped “for the sake of their beleaguered private equity owners (Apax and Permira) that an IPO is on the cards in 18 months time.”