New Look aims to cut debt by £1bn in restructuring plan
New Look will cut debt by £1bn as part of a restructuring deal agreed with investors, the fashion retailer announced this morning.
The company has agreed a debt-for-equity swap proposal to reduce debt from £1.35bn to £350m. The firm also announced a new capital raise of £150m through the issuing of new bonds.
The firm blamed its situation on “increased headwinds” at the end of last year as like-for-like sales shrunk by 5.7 per cent in December, further hit by store closures.
In the UK, New Look is closing 85 stores, with the future of 13 more being negotiated with the landlords.
Read more: Cost-cutting helps New Look slow decline in like-for-like sales after China exit
Executive chairman Alistair McGeorge said: “Today’s agreement represents a critical step in our turnaround plans and lays the foundations to secure the future and long-term profitability of New Look by materially deleveraging our balance sheet and providing us with the financial flexibility to better attack our future.
“Over the past year we have made significant progress with our wider turnaround plans to rebuild our position in the UK womenswear market and recover the broad appeal of our product whilst implementing significant cost savings and efficiencies.
“However, it has been clear for some time that the Group’s existing level of indebtedness has been constraining our ability to accelerate our turnaround plans and would continue to limit our growth in the future.
“Therefore, today marks an important milestone for the business, our colleagues, our suppliers and all our other stakeholders. A materially delevered balance sheet and a more flexible capital structure will allow us to better navigate the challenging market environment and create a stable operating platform so that we can achieve further progress against our turnaround plans.
“Upon completion of the restructuring, our focus will be to enhance profitability by continuing to provide fantastic product for our customers, building brand equity and grasping new market opportunities.”