New Look extends refinancing as turnaround 'progresses'

The retailer has agreed an extension of all maturities on senior debt until April 2015.

Last month Retail Week revealed that New Look had reached an agreement with senior leaders to extend the maturity of its debt but that the deal had not been formalised. Today the retailer confirmed that the agreement received 100% consent from its syndicate of lenders.

The deal gives the debt-laden business space to breathe while it conducts its turnaround after a turbulent two years which has seen senior directors quit and sales fall.

The news comes as New Look reported EBITDA fell from £191m to £147m in the year to March 31.

Like-for-likes dropped 5.7% while total revenue dropped 2% to £1.5bn.

New Look said the group has maintained its number two position in the UK womenswear clothing and accessories value market and added that a “rigorous focus on costs and working capital” contributed to an improved cash position at year end of £212.3m compared to £191.4m the previous year.

“We made considerable progress in our strategy of improving ranging, pricing and quality and broadening our appeal across our customer base,” said the statement.

“We continued to keep tight control of inventory and worked to improve lead times to give us greater flexibility to buy into the key seasonal trends. Looking forward, this focus will allow us to reduce our markdown and improve gross margin.”

New Look executive chairman Alistair McGeorge said: “New Look is making good progress in its turnaround, delivering on our plan, in what remains a challenging consumer environment.

“The evidence for this can clearly be seen in our performance in the second half compared to the first. When I joined the business a year ago we were facing significant internal disruption, we had lost our edge in terms of our value position and alienated some customers with our ranging.

“All this meant we had undermined our competitiveness on the high street. We have made significant progress in addressing these issues – work that will continue through this year.”

The retailer also added that it expects to continue to see strong growth in its online business, which will result in the closure of 50-100 stores, as first revealed by Retail Week.

New Look’s new store concept, which it trialled in four stores earlier this year, will be rolled-out to 120 stores in the current financial year.

The retailer said its international franchise business continued to perform strongly, beating its budget. The retailer increased store numbers by 54% and entered four new markets - Indonesia, the Balkans, North Africa and South East Europe.

The extension of New Look’s debt will also allow the retailer’s management team greater time to evaluate options for the PIK tranche.

The Company will also prepay a portion of the senior, second lien and mezzanine debt. At year end, total net debt was in line with last year at £1.1bn.