Fast-fashion chain New Look moved into the black in its year-to-date results this morning, with cost savings and a third-quarter bump in sales providing a much-needed boon for the embattled retailer as it looks to tackle a £1bn pile.
Revenue hit £1.02bn in the 39 weeks to 22 December, slipping five per cent from £1.07bn during the same quarter in the previous year.
However, New Look Brand like-for-like sales in its core UK business nudged up 0.9 per cent in the three months to 22 December, despite year-to-date sales falling 2.3 per cent.
The retailer posted underlying operating profits of £38.5m for the nine-month period, marking an improvement from losses of £5.1m in the year before.
Core adjusted earnings before interests, tax, depreciation and amortisation (Ebitda) rose 75 per cent to £78m.
According to New Look, click-and-collect continued to drive footfall into stores, increasing from 44 per cent to 47 per cent of its online sales mix.
Why it’s interesting
It was not all doom-and-gloom in today’s trading statement from New Look. Sales fell in line with expectations, and a slight improvement in sales during the crucial festive trading season will be welcomed. The group also swung into profit, in a move that it likely to give weight to its current turnaround plan.
New Look also said that key womenswear categories had continued to improve profitability.
Yet the results come just a month after New Look struck a refinancing agreement to cut its debt from £1.3bn to £350m in a deal that will mean its lenders take far more control. The move, set to take shape in the second quarter of this year, involves a debt-for-equity swap will see bondholders take control of 92 per cent of the company’s equity.
What New Look said
Executive chairman Alistair McGeorge said: "Today’s results show that we continue to make good progress in delivering improved operational and financial stability despite the challenging retail environment. Our return to broad appeal product continues to enhance profitability, our supply chain lead-times have improved, and we have exceeded our planned cost savings. However, we have more work to do and our focus is now on accelerating our turnaround plans.
"Central to this is finalising our financial restructuring, which will secure the future and long-term profitability of the company. The proposed restructuring has provided our colleagues and suppliers with renewed confidence, which will benefit the company at every level. The right capital structure and a materially deleveraged balance sheet will provide us with the financial flexibility to better attack our future amid challenging market conditions.
"Upon completion of the restructuring, our focus will be to further enhance profitability by continuing to provide fantastic product for our customers, building brand equity and grasping new market opportunities."