New Look seeks approval for plan to cut stores and rents
On Thursday New Look will open a brand new flagship store at the eastern end of London's Oxford Street.
The irony will not be lost on staff of 60 other New Look stores, including two existing Oxford Street outlets, that are facing imminent closure.
New Look, in a bid to salvage its finances, is planning to shut 10% of its shops and is asking landlords to reduce rents on nearly 400 others.
Landlords will vote on whether to accept the rescue plan later today.
It's part of boss Alistair McGeorge's strategy to reduce costs and refocus the brand on its core 25-45 year old customers.
But New Look is just the latest High Street brand facing a survival-of-the-fittest battle with rising costs and consumer spending that has been squeezed by inflation and stagnant wages.
On top of that New Look overstretched itself with nearly 600 stores across the UK, an unsustainable weight of debt, and a faltering strategy to attract younger consumers.
Mr McGeorge, who ran New Look between 2012 and 2014 was brought back in November as the firm's sales both on and offline tumbled.
He cancelled a plan to move the firm's headquarters to King's Cross and drew up a new strategy.
He decided the firm should shed stock aimed at younger consumers at the high-fashion end of the market and refocus on selling "back-to-basic" items with broader appeal, at lower prices, to its increasingly alienated core female customer base.
But New Look's biggest problem now is the "obscene" number of shops its still runs with the associated costs, says Charlotte Pearce, analyst at Globaldata.
"A ten percent cut isn't enough," she says. "I don't know any other retailer that has such a huge store base."
When Mr McGeorge left New Look in 2014 the brand represented 2.6% of the UK clothing market. Since then its fallen to below 2%, she says.
If landlords agree to renegotiate rents that will be a start.
"It's a step in the right direction. It just doesn't go far enough.
"They need to keep rationalising and cut the store base in long run. That's how retail is going. Its about getting the right stores in right locations."
New Look
Founded 1969 with first store in Taunton, Somerset
594 outlets in UK
213 outlets in Europe, China and the rest of Asia
Bought by private investment vehicle Brait in 2015. Brait also owns a stake in Iceland and Virgin Active Gym
UK like-for-like sales in Q3 in February down 10%
But New Look faces other challenges in the form of rising costs. Richard Lim, at the consultancy Retail Economics estimates operating costs rose by 3% last year thanks to the fall in the value of sterling and rising business rates. At the same time consumers continued to shift their spending onto leisure activities like cinema visits and eating out.
While some online brands successfully lured younger consumers to their sites, New Look's online sales were also sharply lower. And on the High Street where they were supposed to hold sway, they faltered.
"The obvious comparison is with Primark," says Mr Lim.
"Primark has been successful without any online presence. That shows the strength of their proposition, that they're standing out in market and driving their customers into physical stores.
"New Look hasn't been able to reach out in the way Primark has with its in-store presence or keep up with the more nimble online retailers like Asos and Boohoo."
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