New Look CVA gets green light from landlords saving over 11,000 jobs

The retailer said the CVA had “been approved by the requisite majority” of more than 75% of creditors, including a swathe of disgruntled landlords, at the vote which took place on the proposed measure today. 

Along with moving 402 of its stores over to turnover-based rent agreements of up to 12%, the passage of the CVA means that New Look has also completed a contingent debt-for-equity swap reducing debt from over £550m to around £100m. 

The retailer has also agreed an extension on its primary working capital facilities with its lenders and a cash injection of £40m to support its turnaround plan. 

New Look chief executive Nigel Oddy said: “I would like to take this opportunity to thank our landlords and creditors for their support for our CVA, which, alongside the consequential financial restructuring that will now be progressed, will provide us with enhanced financial strength and flexibility, and a sustainable platform for future trading and investment.

“We still fundamentally believe the physical store has a significant part to play in the overall retail market and our omnichannel strategy. We look forward to working closely with our landlords and all creditors to ensure we can navigate the uncertain times ahead together.

“Over the course of the last three years, we have successfully implemented our turnaround plan: returning to the proven broader-appeal product and value-led pricing that we are known for, fundamentally realigning our supply chain to be faster and more flexible; making our omnichannel model more cohesive than ever; driving operational efficiencies; and bringing in new talent across the business.

“The impact of Covid-19 has reinforced this relentless focus on our customer-orientated strategy. As one of the UK’s leading womenswear retailers, New Look is a brand that has inspired tremendous loyalty over the past 50 years and we are determined to enhance our position as the leading convenient broad-appeal fashion destination loved by 25- to 45-year-olds as we navigate the post-Covid-19 landscape.”

New Look launched its CVA on August 26 and the proposals have come in for significant criticism in the weeks since. 

The British Property Federation lashed out at the proposals at the time, claiming it “fails to meet our best practice standards for CVAs and contains terms that property owners will object to”.

Ahead of today’s vote, a number of landlords had said they would vote against the proposals, citing issues with the way that the turnover figures had been arrived at and also worrying about what precedent the CVA would set for other struggling fashion brands. 

Landlords also said the retailer had not been forthcoming with sharing turnover information on stores during discussions and even questioned whether the retailer was in as precarious a financial situation as it made out. 

However, one source close to the retailer said that if the CVA didn’t pass, New Look faced “Armageddon” with news surfacing that Boohoo might consider a bid for the business in administration at the expense of its 450-plus store estate and over 11,000 jobs.