New Look sees losses widen but cheers underlying improvements

Fashion chain New Look has slumped deeper into the red with losses of more than £500 million after hefty writedowns and warned that trading remains “challenging”.

The retailer reported pre-tax losses of £522.2 million for the year to March 30, against losses of £190.2 million the previous year after writing off £402 million of goodwill and brand value.

But the group – which has been shutting stores under a major overhaul – saw sales falls narrow and reported an improved performance at the operating level as it posted underlying profits of £33.2 million against losses of £35.7 million the previous year.

It reported core like-for-like sales in the UK and Ireland down 1.6% against the 11.6% tumble seen the previous year.

Total group-wide annual revenues fell 3.8% to £1.2 billion as it shut stores and focused on more profitable sales.

New Look executive chairman Alistair McGeorge said the group was making progress in its overhaul, but stressed there is “more work to do”.

“Whilst New Look enters the new financial year in a fundamentally healthier and stronger position, in many respects today marks the starting line,” he said.

“We have more work to do to enhance trading and deliver further operational improvements as we continue our turnaround plans.”

He added: “We expect the retail environment to remain as challenging as ever in the year ahead, with continued Brexit uncertainty and unseasonable weather impacting current trading.”

Mr McGeorge also admitted that the group’s recent woes had affected its ability to hire new talent, although he cheered the appointment on April 1 of former House of Fraser boss Nigel Oddy as chief operating officer.

Founder Tom Singh also recently announced plans to retire at the end of June.

The chain has upended its leadership team after completing £1.3 billion in debt refinancing last month as part of its turnaround plans.

It has also closed more than 80 stores as part of a Company Voluntary Arrangement (CVA) and has retrenched from overseas markets such as China and eastern Europe.

The group said it was ahead of plan with cost savings of more than £80 million and was eyeing further efficiencies in the new financial year.