1,000 jobs at risk as New Look plans to close 60 stores
The move could see the Merry Hill menswear branch close
Nearly 1,000 shop workers face the axe after struggling fashion chain New Look revealed plans to shut 60 stores as part of a rescue plan that will see the rent it pays slashed at nearly 400 more shops nationwide.
It is the latest victim of the slowdown on the high street that has already seen Toys R Us and Maplin collapse into administration, while a string of restaurant chains have been forced to announced closures.
With less money being spent on the high street New Look is having a tough time fending off cheaper rivals like Primark and the big supermarkets as well as online budget fashion stores like Asos.
Primark is doing particularly well and is opening its biggest-ever UK store at Birmingham's Pavilions shopping centre later this year.
But New Look has struggled amid a "challenged trading performance and a difficult retail environment" and has put together a rescue deal that will see it close 60 stores, including its Mens shop at Merry Hill - only opened two years ago and one of the first of its new menswear outlets.
It has also secured rent cuts at 393 of its remaining 533 UK shops – about two thirds – which will almost certainly include some of its local stores at Wolverhampton's Mander Centre, Walsall, Cannock, West Bromwich, Dudley High Street and Halesowen, as well as its womenswear shop at Merry Hill and its two stores in Stafford – at the Queens Retail Park and the newly opened branch at Riverside
The rescue deal is called a Company Voluntary Arrangement (CVA) and New Look says all the stores will remain open until its creditors – banks, suppliers and landlords – vote on the proposal on March 21.
Up to 980 jobs out of its workforce of 15,300 under threat, although New Look said it would look to redeploy staff where possible.
Alistair McGeorge, executive chairman of New Look, said: "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."
Daniel Butters and Neville Kahn of Deloitte, the business advisory firm, have been appointed as nominees to the CVA. Daniel Butters said: “The retail trading environment in the UK remains extremely challenging, driven by weaker consumer confidence, the implications of Brexit and competition from online channels.
“New Look is an iconic brand on the high street and 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.
“It is important to stress that no stores will close on day one, and employees, suppliers and business rates will continue to be paid on time and in full.”
Stephanie Pollitt, assistant director (real estate) at the British Property Federation (BPF) said: “These situations are never easy as landlords need to take into consideration the impact on their investors, including those protecting pensioners’ savings, as they vote on the CVA proposal.
“New Look and Deloitte, however, have demonstrated best practice, constructively engaging with the BPF early in the process and ensuring landlords’ interests have been properly taken into account. Ultimately, it will be for individual landlords to decide how they will vote on the CVA, but the proposal has sought to find a solution that works for all parties.”