New Look Q1 sales and profits plunge in "difficult" market
Young fashion retailer New Look suffered a -4.4% drop in revenue in Q1 while underlying profits slumped more than 60% as the UK market "remained difficult".
Revenue in the 13 weeks to 24 June was £338.7m, down -4.4% on the same period last year. Overall brand like-for-like sales were down -8.2% while UK like-for-like sales were down -7.5%. Online sales were down slightly at -0.6% while third-party online sales were the only bright spot, up 15.7%.
Profitability was hit in the quarter with EBITDA down -37.3% to £27.2m due to the challenging market and investments made in strategic initiatives. Underlying operating profit dropped -60.3% to £12.1m, which led to a loss after tax of £15.2m, compared to a profit of £5.8m in Q1 last year.
Chief executive Anders Kristiansen said as expected the UK market had "remained difficult" during the quarter leading to "disappointing" figures.
"We have managed the business accordingly by controlling costs, tactical investment in our strategic initiatives and enhancing our product proposition," Kritiansen said. "We remain committed to our long-term strategy of diversifying the business and reducing our dependence on the UK high street, and are confident that we will see improvements, but expect these to take time."
Kristiansen said the business would be bolstered by the arrival of new chief creative officer Paula Dumont Lopez, former head of product at Zara Basic, next month and that it was "pleased with our continued expansion in China", where it had opened another 17 stores taking the total number to 127.
"In the UK, we are now trialling our new store concept and are encouraged by the early results," Kristiansen said. "Looking ahead, we expect the consumer economy to remain fragile and challenging market conditions to persist into 2018. We will continue to manage our business prudently and focus on providing our customers with exceptional product and real value for money."