New Look seeks turnover-based rent in second restructuring plan
New Look has proposed another restructuring of its retail network, its second in three years, after coronavirus significantly impacted its finances.
The fashion retailer has asked landlords to agree new turnover-based leases across its portfolio, having already closed stores and negotiated rent reductions as part of a company voluntary arrangement (CVA) two years ago.
“Out of absolute necessity, we are preparing to launch a CVA that would reset our rental cost base back to market rent through a turnover-based model that fairly reflects the future performance of the company and wider retail market,” it said.
The new restructuring plan is expected to be launched on 26 August.
New Look has also agreed the key terms of a recapitalisation with its banks and bondholders, including a debt for equity swap which will reduce its debt from £550m to £100m.
It will also decrease interest costs, gain an extension of working capital facilities and secure an injection of £40m of new capital.
New Look chief executive Nigel Oddy said the recapitalisation, which is aimed at saving 12,000 jobs, “can only be delivered if we secure the support of our landlords for our forthcoming CVA”.
Since lockdown ended, New Look has reopened 459 of its 496 stores in the UK and Ireland.
Store sales are down 38 per cent since the beginning of June, which New Look said was due to reduced footfall as a result of the pandemic.
New Look’s adviser PWP will also be contacting strategic and financial investors to determine any potential interest in buying New Look’s shares or assets.