New Look needs to be fashion forward
Following news that New Look has returned to profit, the fashion retailer now has its real work cut out.
It’s over a year now since New Look had its Company Voluntary Arrangement (CVA) agreed with landlords and creditors, which covered the closure of 60 stores, and lease terms revised and rent reduced on the remaining 400 stores.
It then managed to find £150m to invest in the business, by doing a debt for equity deal with major stakeholders, which reduced debt from £1.35bn to £350m, and cutting costs across the business.
The various announcements contained nothing of substance in terms of where the investment would be going, other than it will centre on the UK, not overseas, where operations have been cut right back.
New Look executive chair Alistair McGeorge said in an earlier announcement: “We have achieved a remarkable amount over the past year, delivering on our aim to achieve financial and operational stability.”
New Look faces challenges ahead
Cutting costs will seem like the easy bit compared to what the company now faces. Our concerns are over the significance of the New Look brand in a competitive environment that has completely changed since the days when Zara and New Look were hailed as the leaders in fast fashion. New Look’s ability to remerchandise every two weeks had competitors wondering how the hell they did it, but that was way before consumers were buying fashion online.
Now, the likes of Missguided, Boohoo and Asos are dominating in fast fashion and also turning out apparel for the way people are shaped today, which is no longer the idealistic view once espoused by the fashion industry.
Does New Look have a clear brand identity?
New Look is not fashion forward in the way that Kos, Other Stories, Arket, Bershka, Mango are, and my worry is that New Look is caught between the discounters and the brands, with no clear identity in the middle.
It does have a significant high street presence and an improving online offer, but it is the next 18 months that will tell whether this brand has enough relevance for its core market. It will also be interesting to see what it does abroad, which currently accounts for 20% of its sales.