New Look has pulled out of its franchise agreements in Russia and Ukraine, blaming financial and political instability in the two countries.
The value fashion retailer, which had previously targeted Russia as a key area of growth, said yesterday it was closing all 20 shops in Russia and six shops in Ukraine.
Chief executive Anders Kristiansen said: “We just thought it wasn’t right to invest in a market that wasn’t politically stable.”
He added: “It’s not the right place for us to be at the moment.”
The group will instead focus its expansion on China, where Kristiansen said the retailer was benefitting from the “Cool Britannia” effect and demand from fashion hungry shoppers for more affordable western brands.
It has now opened 14 shops in China and plans to grow to 20 by the end of the year, with a further 30 earmarked for 2015.
New Look is also ramping up its presence in Poland, where it has 11 shops, after buying out its franchise partner earlier this year.
Kristiansen’s comments came as New Look reported that pre-tax profits had soared 89 per cent to £26.1m in the six months to 27 September, compared with £13.8m the same time last year.
Sales across the retailer’s 803 worldwide stores climbed 4.7 per cent to £788.6m, while like-for-like sales rose 6.9 per cent.
In the UK, same store sales were up eight per cent despite slowing to 2.1 per cent in the second quarter as the mild weather hit demand for winter clothing.
“[The weather] is what it is. But we are creating a business that can better manage those weather conditions,” Kristiansen said.