New Look prepares strategy overhaul to combat slump

New executive chairman Alistair McGeorge said the company had been sidetracked by the move of its head office from Weymouth to London and a failed IPO attempt. He said the company’s price architecture had become out of kilter with its rivals by being too weighted to the upper end of the scale, and that the offer had become too focused on younger shoppers.

New Look saw its pre-tax profit of £36m in 2010 wiped out in the year to March 26. Its underlying operating profit of £98m was down 40% on the previous year. Total sales were flat but UK like-for-likes dropped 7.1% on last year.

Former Matalan boss McGeorge said he is undertaking a strategic review of the business, and intends to bring in a new chief executive once the review has identified the key skills required. He said the move from Weymouth had hit the buying function harder than had been thought.

“We’ve got some very good people in the business, but what we’re doing is restoring leadership. People are lacking a bit of confidence.”

He said the company had been boosted by the return of design and buying chiefs Barbara Horspool and Roger Wightman, both of whom were due to leave before the ousting of former chief executive Carl McPhail, while founder Tom Singh is also playing a “very active” role in product and supply chain.

McGeorge added that he felt the business was “not very cost-conscious”. He reiterated his commitment to New Look’s home town of Weymouth, but it emerged that this week around 40 of the 200 or so staff there have been warned their jobs were at risk. He also said he planned to renegotiate leases with landlords to extend deals in return for better terms.

While international and multichannel expansion remains on the agenda, the main focus of the business in the short term is to be in turning around the core offer: “We do retain ambitions to be an international, multichannel retailer but that cannot be in place of a successful UK business.” A key aim is to reduce the proportion of markdowns and focus on selling at full price, which McGeorge hopes can partly be achieved by sourcing closer to home.

He said New Look’s owners Apax and Permira remained “totally committed” to the business and had not set out a specific timescale for exit, although “our owners are ultimately sellers” he said.