New Look issues profit warning amid ruthless restructuring plans
- Credit: Nick Butcher
In the latest stumble of the British high street, fashion retailer New Look has issued a profit warning.
The brand has outlets in Norwich's St Stephen's Street and Castle Mall, as well as in Great Yarmouth, Gorleston, Beccles, Thetford and King's Lynn.
The mens and womenswear shop announced plans for a debt-for-equity swap; a financial restructuring that should secure the company's financial future.
The restructuring will see the firm's long-term debt reduced from £1.35bn to £350m, alongside a new capital raise of £150m funded by the issuing of new money bonds.
As a result, New Look's annual interest payments will reduce from £80 million to £40 million and its borrowings have been extended to 2024, giving it breathing space.
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It will mean the company's bondholders will hold 72% of the group's equity.
Chairman of Brait, the owners of New Look, Alistair McGeorge, said: 'Today's agreement represents a critical step in our turnaround plans and lays the foundations to secure the future and long-term profitability of New Look by materially deleveraging our balance sheet and providing us with the financial flexibility to better attack our future.
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'Upon completion of the restructuring, our focus will be to enhance profitability by continuing to provide fantastic product for our customers, building brand equity and grasping new market opportunities.'
New Look pointed to 'increased headwinds' in late November that pushed its UK like-for-like sales to decline 5.7% in December, resulting in comparable sales growth of just 0.9% in the third quarter as a whole.
The decline in total UK sales was further hit by the loss of stores under a closure programme.