FASHION chain New Look will spend the next three years revamping hundreds of stores after it improved margins and returned to the black with a slim full-year profit.
The retailer, which is owned by two private equity firms and founder Tom Singh, said yesterday that its three-point turnaround plan of cost savings, profit margin improvement and revenue growth was “delivering real results”.
The firm has refurbished 145 stores under its recovery drive and said the remaining branches will be completed over the next three years. About 600 of New Look’s 1,100-plus shops are located in the UK.
It is also curtailing the need for promotions and sales by strengthening its mix of full-price products and scaling back its stock.
Results for the 53 weeks to 30 March show that the group made a pre-tax profit of £3.1 million compared with losses of £54.5m a year earlier despite tough high street conditions.
Overall sales rose 2.5 per cent to £1.48 billion, with like-for-like takings dipping 0.7 per cent. Online sales leapt 50.1 per cent after a concerted push for its internet offering, rolling out a click and collect and order-in-store service. Gross margins improved 2 percentage points, reflecting tighter stock controls and lower markdowns.
The group, which already operates across 32 countries, is planning to expand further internationally, with aims to launch 20 franchise stores across China in the 2014-15 financial year. It is also setting its sights on India.
Chairman Alistair McGeorge said: “I am delighted to report that our three-point turnaround plan enabled us to deliver strong results and continue to re-invest in our business.
“The strength of our financial turnaround has also enabled us to address our capital structure, with the successful refinancing of our debt.”
The firm said it had ended its financial year with net debt of £1.1bn after a refinancing that extended maturities to 2018.
Recently-appointed chief executive Anders Kristiansen, who took up the post in January, also hailed the success of the group’s turnaround.
He said: “I applaud the achievements of the past financial year – not only the containment of costs, but also an impressive improvement in underlying profitability.
“I believe New Look is now well positioned to explore exciting development opportunities of new markets in eastern Europe and south-east Asia – specifically Russia and China.”
Group adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) rose 29 per cent to £189.2m.
The business, which claims to be the biggest “value” retailer for women under the age of 39, was founded by current shareholder Singh in 1969. He is a founder member of the Social Investment Task Force and is active as a philanthropist.
New Look’s private equity owners – Apax and Permira – planned to raise around £650m through a stock market flotation in 2010, but it was shelved amid turmoil in the financial markets.