New Look to exit China, continues to review other non-UK ops
Under-pressure retailer New Look said on Thursday it’s to exit China as it switches its focus away from international growth and back to fixing its struggling UK business.
The company has already closed some locations and said that “New Look Commerce (Shanghai) Co Limited now intends to close its remaining 120 stores in the market by the end of December. The Shanghai Head Office will close shortly after this date.”
It added: “Despite substantial investments in China in recent years, performance has been below expectations and this business has not achieved the necessary sales and profitability to support the significant future investment required to continue these operations. The company will ensure its obligations to suppliers, landlords, government and other authorities in China are concluded satisfactorily, and will support all affected staff.”
It also said that the “strategic review of New Look’s other international markets is continuing."
The company, which is also closing a raft of UK stores, is believed to have appointed CBRE to manage its withdrawal from China and find tenants for the stores. This may not be too hard as China is the market that many Western businesses see as their big target for expansion, as well as being one that has a growing domestic retail sector.
New Look’s portfolio there may have been sizeable by British standards, but it was small-scale in the context of the world’s most populous country.
The company is owned by South African investment firm Brait and its biggest business is in the UK but, like other British firms, it had once hoped that China would provide a major new growth opportunity. Today however, fixing the troubles in its domestic market are now dominating its thinking after the company won creditor backing for its British store closure programme earlier this year.
The company isn’t alone in finding China a step too far for its once-lofty ambitions. UK peer Topshop also said in the summer that it would end its franchise agreement there.
On Thursday, New Look executive chairman Alistair McGeorge said that “as our turnaround plans continue, we remain focused on ensuring that New Look is well positioned to drive strong business performance and profitable growth.”
That focus has also meant a rethink of its international ops overall, including closures expected in France, Belgium and Poland. The firm’s international operations made a loss of £37 million in the year to March so it’s certainly not a case of it exiting a thriving operation.
The business is still operating under a company voluntary arrangement (CVA) in the UK and plans to close 60 of its domestic stores, although most of these remain open for now so it’s still operating around 600 stores in Britain.
Copyright © 2023 FashionNetwork.com All rights reserved.