New Look to close some UK stores as creditors back restructuring
Reuters
Published Mar 21, 2018 17:19
New Look to close some UK stores as creditors back restructuring
LONDON (Reuters) - Creditors and landlords of New Look overwhelmingly approved the British fashion retailer's restructuring plan at a meeting on Wednesday, enabling it to stave off a potential fall into administration, the company said.
Earlier this month, the chain, owned by South African investment heavyweight Brait (J:BATJ) and saddled with 1.2 billion pounds of debt, said it would seek creditor approval for a Company Voluntary Arrangement (CVA)
The plan will see the closure of 60 of its 593 stores in Britain and reductions in rent, ranging from 15 to 55 percent, and revised lease terms across another 393 stores. It would lead to up to 980 redundancies among its UK workforce of 15,300.
At Wednesday's meeting 98 percent of votes cast were in favour of the restructuring proposals.
“In order to help restore long-term profitability, it is clear we need to reduce our fixed cost base," said Executive Chairman Alistair McGeorge.
"We are therefore pleased to have gained the support of our creditors to address our over-rented store estate."
New Look said the affected stores would likely close within six to 12 months, subject to decisions by individual landlords.
The retailer, which also has 313 overseas stores, is another victim of Britain's brutal trading environment where consumer spending is under pressure as inflation runs ahead of wage rises and with economic uncertainty due to Brexit.
Traditional store groups are also struggling with a boom in online shopping, while early March snow storms also hit demand.
Already this year Toys R Us UK and electronics retailer Maplin have collapsed into administration.
Separately on Wednesday, Carpetright (L:CPRC) said it was seeking to close stores after multiple profit warnings. Baby goods retailer Mothercare (L:MTC) has also warned on profit.
New Look's woes are another headache for South African businessman Christo Wiese, the biggest shareholder in Brait, after a share price crash in Steinhoff International (J:SRRJ) stripped him off his billionaire status.
Wiese backed Brait's bet on the British consumer in 2015 in a 1.9 billion pound deal that put it in a crowded sector competing with fast growing online rivals such as ASOS (L:ASOS) and Boohoo (L:BOOH)
Brait wrote down the value of New Look to zero in November until its "turnaround strategy has taken shape", adding that it remained a committed long-term shareholder.
Get The App
Last month New Look reported a 72 percent slump in core earnings for the nine months to December.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.