Moody’s has downgraded New Look’s credit rating, calling its debt levels “unsustainable” and its cash flow “insufficient”.
The credit ratings agency downgraded the retailer’s corporate family rating and probability of default rating, saying it was concerned about New Look’s ability to generate enough cash to continue trading.
It labelled the retailer’s debt “unsustainable” and forecast that the retailer will have a cash balance of just £20m at the end of its 2019 fiscal year – half of what it needs to stay in business.
New Look has had a torrid time in recent years. Former chief executive Anders Kristiansen was fired from the retailer after setting it on a fast-fashion strategy, which was then decried by his successor Alistair McGeorge.
McGeorge was previously executive chair of the business from 2011 to 2013 and successfully turned it around before handing the reins to Kristiansen.
Moody’s lead analyst for New Look, Victor Garcia Capdevila, said: “Our downgrade reflects New Look’s inadequate liquidity profile and the unlikely financial support from its owner, Brait, which will lead to a restructuring of the company’s unsustainable capital structure.
“Although the turnaround strategic plan put in place by the new senior management team is improving the operating performance, EBITDA will not grow rapidly enough to refinance the current capital structure on reasonable terms and without significant financial losses for bondholders.”
No comments yet