New Look cuts production, marketing, but firm remains optimistic
Mar 24, 2020
Recovering value fashion retailer New Look said on Tuesday that it's stopping all production and reining-in its marketing as it deals with an unprecedented situation due to the coronavirus. Although its online store remains open, it has seen the closure of its 480 UK and 28 Republic of Ireland shops.
It didn’t give any specific details around current trading, nor any guidance, as it said the “rapidly evolving nature” of the coronavirus pandemic made it impossible to estimate how the year would turn out.
The company said it’s “focused on preserving cash, maximising liquidity, managing working capital and reducing costs”. As a result, it’s “significantly reducing marketing costs, requesting a three-month rent holiday from landlords, pausing all production, to be reviewed as the situation evolves and in response to demand, delaying all significant capex projects [and] halting all recruitment”.
It said it should benefit from government measures to axe business rates temporarily and to support employee wage costs, as well as the deferral of tax and national insurance payments, and from the Covid Corporate Financing Facility. It believes all of these measures can “significantly improve our cash management”.
The firm entered the current crisis with “strengthened liquidity” following its financial restructuring that completed in May 2019 and other actions it has taken since. It has no near-term maturities on its long-term debt funding.
CEO Nigel Oddy said its “absolute priority is to keep our customers and colleagues safe, which underlined our decision to temporarily close our stores in advance of government advice to do so. Given the unprecedented circumstances that we, like all retailers, are operating in, we have taken a range of decisive and immediate actions to help us navigate through the coming period.
“We are confident that a combination of these ongoing actions, the significant financial and operational progress we have made over the past two years with our turnaround plan, and the strength of our brand mean that we will be well positioned to return to growth when a more normalised operating environment resumes.”
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