New Look sales start to climb again, despite Q1 loss
New Look said Wednesday that it has seen an “encouraging recent sales performance after a challenging start to the year” as it delivered its Q1 results.
It also reported its first like-for-like sales increase in some time for the current quarter (Q2), and initiatives such as the addition of concessions into flagship stores, plus an improved supply chain that allows it to buy into trends more quickly.
Although it was a Q1 report, the best news didn't cover Q1, as the company said it has seen an improvement in the Q2-to-date trading performance (the eight weeks to August 24) with like-for-like sales up 2.2%.
That's not only significant because of New Look's recent troubles, but because the UK fashion retail sector as a whole didn't have a great time during July and August, with plenty of companies reporting sales grinding to a halt.
The 2.2% may seem like a small achievement to be shouting very loudly about, but it’s a big deal for New Look and the problems the company has faced can be seen clearly from its results for Q1.
It said the 13 weeks ended June 29 were loss-making even though the losses were much smaller – the statutory pre-tax loss was just £2.7 million, an improvement of £12.8 million year-on-year.
That said, a loss is a loss and the company still has a way to go until its turnaround can be declared complete. Revenues during the period were down, with ‘core’ (that is, UK and Ireland stores, franchises and e-tail) total revenue of £258.3 million, down from £300.6 million a year ago. And like-for-like sales fell 10.1%, “reflecting lower footfall due to highly unseasonable weather and ongoing consumer uncertainty.” It all meant core adjusted EBITDA of £23.5 million, a drop compared to £33 million a year earlier.
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Executive Chairman Alistair McGeorge hailed the conclusion of the firm’s comprehensive financial restructuring, which he said had secured its long-term future.
And he also said the business suffered from many of the problems faced by its peers in the retail sector in Q1. “Trading was marked by continued consumer uncertainty and, being a seasonal business, we were clearly not immune from what has been the most unseasonable May and June on record, impacting footfall across the retail sector,” he explained.
“Despite these challenges, we maintained good control of our stock, cash position and costs. I am pleased our recent trading shows that we have delivered positive LFL sales performance and we have outperformed the market, which underlines our continued confidence.”
He also emphasised the importance of the appointment of Nigel Oddy as CEO earlier this year, adding that the company also now has a Chief Customer Officer in place with “more changes to come.”
Oddy himself focused on the changes that the company has been making: “We are now starting to see improvements in Q2, reflecting the operational changes we are making as we continue to recover the broad appeal of our product. ‘Broad appeal’ and ‘core’ clothing categories now represent 95% of our product mix and this enhanced offer is resonating with our customers.
“We are transforming our attitude to buying and are fully focused on buying into successful trends quickly, supported by an improved supply chain. We have also made good progress with our omnichannel strategy and are now seeing record levels of Click & Collect orders.”
And he seemed to stress the importance of having a fairly large store estate. “Having visited many stores across the country during my first six months with the business, it is clear to me that New Look’s localness – the breadth of our estate and the convenient locations of our stores – is an inherent strength for us to leverage,” he said.
“We are prudently investing in refreshing some of our smaller stores through our ‘Revive’ store refurbishment programme. We have also launched a range of exciting concessions in flagship stores as we look to further enhance the customer experience.”
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