New Look's focus on profitable sales begins to pay off
New Look's revenue was down -4.2% to £656.9m in the half year to 22 September, a drop it said was in-line with expectations, as it continues its focus on full-price sales which yielded an improvement in profit during the period.
Like-for-like sales were down -3.7% which was the second consecutive quarter of an improvement in the like-for-like sales trend. For the full financial for 2018, like-for-likes were down -8.6%.
Profit, however, was improved with EBITDA up to £49.8m (H1 FY18: £24.2m) supported by cost savings. Underlying operating profits were up at £22.2m (H1 FY18: underlying operating loss of £10.4m).
The business said its turnaround plan was showing results with improved sales and profitability in key womenswear categories (though challenges remain in footwear and accessories) and the women’s clothing in UK stores outperformed the market by 5.6 percentage points according to BRC (British Retail Consortium) with an improvement in overall share.
Online and in-store conversion rates had improved with with e-commerce profitability increased "substantially", the business said.
Overall the business said it had achieved £70m in cost savings with a further £8m identified. Last month it announced it was exiting the China market, a decision executive chairman Alistair McGeorge said was "a difficult one but was right for the business", and said it was continuing to assess its international operations.
"We are making good progress in recovering the broad appeal of our product, evidenced by the improvement in our market performance and customer conversion rates."
Alistair McGeorge, Executive Chairman, New Look
"I am encouraged by our performance in the first half of the year, which reflects the progress we are making with our ongoing turnaround plans to rebuild our position in the UK womenswear market. The significant cost savings which have been implemented are delivering improved profitability and we continue to see better performance in our new womenswear ranges," McGeorge said.
“We are making good progress in recovering the broad appeal of our product, evidenced by the improvement in our market performance and customer conversion rates. We expect this to continue in the second half as the changes we have made in the remaining categories of our product review start to take effect," he added.
Moving forward, McGeorge cautioned, that the business faced "significant headwinds and uncertainties, including Brexit". "Clearly the wider retail environment remains challenging and we are not expecting that to change anytime soon. However, we are on the right track and continue to drive further efficiencies across the business. As we look to the second half, our focus will be to continue to improve our financial and operational stability and further capitalise on our brand strength to position us well for the future," he said.