New Look announces CVA, to cut nearly 1,000 jobs
New Look has officially announced its long-rumoured company voluntary arrangement (CVA) proposal with which it’s targeting a reduction in its store count and rent costs.
Stories have swirled around the mass-market fashion retailer for months as sales and profits have fallen and the firm has faced a rent bill that has made many of its stores either less profitable than they used to be or actually lossmaking.
It comes amid what the company said is a “challenged trading performance and a difficult retail environment.”
So what are the details? The retailer is, as of Wednesday instigating the CVA and seeking approval from creditors on a plan to “improve [its] operational performance.”
As rumoured, it has identified 60 out of its total 593 stores in the UK for potential closure, alongside a further six sites which are sub-let to third parties. The proposal also includes a reduction in rental costs and revised lease terms across 393 other stores.
And, of course, there will be redundancies at the stores set to close. This is expected to hit "a maximum of 980 colleagues amongst the company’s current UK staff base of 15,300 people,” New Look said. “However, all efforts will be made to redeploy colleagues within the business where possible.”
It’s seeking creditor approval on the proposal, which is due on March 21 and until then, all UK stores will remain open as normal. The e-store will be unaffected by the proposed changes.
Daniel Butters and Neville Kahn of Deloitte have been appointed as Nominees to the CVA.
So what did the still-new executive chairman Alistair McGeorge have to say? “Given our challenged trading performance and over-rented UK store estate, we are having to take tough but necessary actions to reduce our fixed cost base and restore long-term profitability,” he explained.
“We have held constructive discussions with our key landlords and strategic partners and will now seek creditor approval on our CVA proposal. A priority for us is to keep all potentially affected colleagues informed during this difficult time.”
Deloitte’s Butters added: “The retail trading environment in the UK remains extremely challenging, driven by weaker consumer confidence, the implications of Brexit and competition from online channels.
“The CVA will provide a stable platform upon which management’s turnaround plan can be delivered. We have fully engaged with the British
Property Federation and its members and their views are reflected in what we believe is a fair proposal to restructure the property obligations of the company.”
The stores to be closed include a mix of full-line locations and menswear-only stores all over the country. On the hit list is the Marble Arch, London, store that is a key flagship, as well as the Oxford Circus location and some stores in Britain’s major malls.
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