New Look to lower prices after sales squeeze

Fashion retailer New Look yesterday vowed to lower its prices after falling consumer demand and internal restructuring wiped out its pre-tax profit.

Executive chairman Alistair McGeorge - the former Matalan boss who was drafted in following the abrupt exit of the previous chairman and chief executive in March - admitted the firm had bought too much stock at the higher end of its range.

He predicted a tough year ahead, with shoppers hit by rising prices and government austerity measures, and retailers facing increased costs of raw materials like cotton. McGeorge said: "I think it's going to be a very difficult year for the retail sector."

Turnover in the year to 26 March fell by 0.2 per cent to just under 1.5 billion, but UK like-for-like sales plummeted 9.7 per cent in the second half, on top of a 4.5 per cent fall in the first half.

The firm just broke even, compared with a 36 million profit in 2010. It was hit by costs associated with relocating its buying, merchandise and design teams and in servicing its 1bn debt.

New Look - which has 1,051 stores in 15 countries - was de-listed in 2004 by private equity firms Apax and Permira along with founder Tom Singh. It tried to return to the stock market last year, but its plans were scuppered by market turbulence and questions over its valuation.

Nick Bubb, retail analyst at Arden, said: "It's a good job that New Look didn't float in the spring of last year, as its final results make grisly reading.

"We expect much up-beat talk about a recovery in the new year, despite the competition from Primark.

"Let's hope, for the sake of its beleaguered private equity owners, that an IPO is on the cards in 18 months' time."