New Look’s creditors approve deal to reduce rents and close stores
New Look’s creditors this afternoon approved a deal to reduce rents and close 60 stores, likely leading to hundreds of job losses at the retailer.
The fashion chain has secured a company voluntary agreement (CVA) with landlords, and said up to 980 staff will be made redundant in a raft of store closures.
The CVA will allow New Look to reudce rents by between 15 per cent and 55 per cent across 393 stores. The three-year agreement was backed by a huge majority of creditors; 98 per cent of votes were in favour of the deal.
New Look has pursued a CVA to reduce its cost base following a tough period of trading for the company.
“In order to restore long-term profitability, it is clear we need to reduce our fixed-cost base,” said Alistair McGeorge, executive chairman of New Look.
“In addition to implementing other cost-saving initiatives, we are already focusing on driving future full-price sales by realigning our pricing to offer significantly better value, adding flexibility to our buying model, and improving our speed to market.”
A raft of retailers have been showing signs of retail distress this quarter, with both Toys R Us and Maplin falling into administration. While discount and online-only retailers have continued to gain market share, established retailers with large property portfolios have suffered.
A terrible day for retail investors: of 50 UK listed retailers, 41 fell, just 9 increased, 1 no change (suspended). Mothercare biggest gainer thanks to breathing space given by lenders. Moss Bros biggest loser after profit warning pic.twitter.com/vvHDbebhOk— Patrick O’Brien (@pat_gdretail) March 21, 2018
Eric Benedict, UK market leader at AlixPartners, said retailers needed a “clearly defined” proposition in order to succeed.
“A combination of a poor offering with a punitive cost base has rapidly exposed the weaker players, many of whom over expanded on the basis of breadth of sales, rather than depth of sales,” Benedict said.