The High Street battle for Christmas spending looked more critical on Tuesday as fashion retailer New Look’s losses racked up, while rival Primark’s owner’s shares slumped despite a surge in sales.
Ailing fashion chain New Look became the latest casualty of Brexit-fuelled inflation and tough conditions on the high Street.
It plunged £10.4 million in the red in the six months to 23 September from a £59.3 million underlying profit in the same period last year,
Alistair McGeorge, who was parachuted back in as executive chairman today, said: “The products have gone too young and edgy, our supply chain is slower than we would have liked, the presentation in store can be improved and we’ve chased sales a little too hard; there’s a lot we can do on the cost.”
New Look, owned by South African billionaire Christo Wiese’s Brait, said same-store sales tanked 8.4% in Britain, while total revenue was down 4.5% to £686 million. The fast-fashion company is reportedly in talks with its lenders about restructuring as it tries to cut its £1.2 billion debt pile.
“Despite today’s results, I’m confident we can turn it around,” said McGeorge (pictured), who was executive chairman between 2011 and 2013. “And Brait is committed to be a long-term shareholder.”
Interim chief executive Danny Barrasso will step back to his role as UK managing director. He was appointed after the sudden departure of chief executive Anders Kristiansen in September.
New Look’s results come as growth in non-food sales hit a record low last month ahead of the crucial Black Friday and Christmas periods. In-store sales fell 2.9%, the most in at least five years, said the British Retail Consortium.
And although food-cum-fashion business Associated British Foods said today its annual sales and profits surged, boosted by growth at Primark and in its sugar business, its shares promptly tumbled 3.7% to 3218.6p.
Sales at the fashion chain were 19% ahead of last year, lifted by bestsellers such as its Minnie Mouse and Harry Potter paraphernalia. However, the fall in the pound hurt Primark’s margin, which fell from 11.6% to 10.4%. The company decided not to pass on higher input cost to customers.
Chief executive George Weston said: “We’ve brought our prices down this year even in the face of retail inflation. Our average item sold for less this year than last year. We’re always going to be the best value on the high Street; if you look at our history, bringing prices down is what we do, so no, there won’t be any shifts in how we operate.”
ABF said pre-tax profit in the year to 16 September was up 21% to £1.3 billion, while revenues rose 15% at 15.4 billion.
Last week Next shares tumbled as the retailer warned over tough trading conditions.