New Look is still afloat
The British fast fashion retailer New Look, going through difficult times, has prepared a new plan to save the business, which involves the issuance of new bonds, as a result of which 72% of the value of New Look will be secured by the brand's creditors.Another 5% of the business will be owned by management.
The outstanding debts of the company today amount to about 1.35 billion pounds. After many months of financial and strategic struggle, the retailer's management signed a rescue plan that provides for the transfer of control over the company to creditors as a last resort.
New Look is going to reduce the volume of its debts by 80% to 350 million pounds. The first step to this is an injection of capital of 150 million pounds through the issuance of new bonds. The current owner of the company is a South African investment firm Brait – will remain with a significantly reduced share. In addition, New Look undertakes to reduce payments and interest on its debts from 80 million pounds to 40 million pounds per year.
There are plans to close the remaining 120 stores in China and 60 stores in the UK. The latter is part of a deal thatNew Look was forced to conclude in March to avoid prosecution.
Comments Alistair McGeorge, Executive Director of New Look: "The new agreement represents an important step in our development and lays the foundations for ensuring the future and long-term profitability of New Look by significantly reducing our balance sheet and providing us with financial flexibility. Over the past year, we have made significant progress in implementing plans to change our position in the UK women's clothing market and restore the attractiveness of our products with significant cost savings and increased efficiency. It has long been clear that the current level of debt limits the fulfillment of our sales and growth plans and will continue to limit our growth in the future."
The adopted plan will not be a panacea for the company,New Look is still waiting for a lot of problems. Currently, the brand predicts to receive in the 2019 financial year a profit from business in the UK of 84 million pounds before taxes and penalties. The company's expected losses from its non-core business, including stores in China, France, Belgium and Poland, amount to 27 million pounds.
Photo: New Look