New Look puts Russian expansion on ice amid political concerns

New Look chief executive Anders Kristiansen said: “Russia has been paused because of the situation there. We’re not really looking at Russia now but we may do in the future.”

Russia has retaliated to the sanctions Western countries had imposed on the country over its role in the Ukraine crisis by placing bans on the import of food and agricultural products from Europe and the US. It is feared that could lead to a trade war between Russia and the West.

New Look had identified Russia as one of its four major international targets alongside China, Poland and Germany. It already has 20 stores through franchise in the country but was aiming to move the partnership to a joint-venture.

In June this year, Kristiansen said: “Our decision to build scale in four key geographies, namely China, Poland, Russia and Germany, is, we believe, key to New Look’s future continued success.”

The retailer has made progress in the three other countries it has identified for international growth.

Not all UK retailers are putting the brakes on expansion. Sir Ian Cheshire, the group chief executive of B&Q parent Kingfisher, which generates sales of £450m across 20 stores in the country, said the Russian government has made efforts to protect the consumer from political instability. “We believe the Russian government is likely to think hard before disrupting the consumer environment further, and in our view the market in Russia is still a solid one for us in the longer term,” he said. “However, we continue to monitor the situation closely.”

Other retailers such as Marks & Spencer - that operates 41 stores in Russia, including some with franchise partners - are understood to be adopting a ‘business as usual’ approach.

New Look has opened 10 stores in China since its debut in March. Kristiansen said it was “going well” in the country and he aims to increase the level of local buying for the country from 25% to 100% to gain margin benefits. New Look will open 24 stores in its current financial year.

It has also bought out its Polish franchise partner to help propel growth there and last week launched a German-language website.

Meanwhile, the retailer is currently offloading its loss-making French business Mim, in which it acquired a majority stake in 2004.

The retailer has received an offer, believed to be from Far Eastern conglomerate Asia Global. Kristiansen said he expects a sale within the next couple of months.

Kimonos and printed trousers boost sales

Identifying key trends such as kimonos and printed trousers helped New Look’s like-for-likes soar in its first quarter.

UK like-for-likes jumped 11.6% in the quarter to June 28 and group like-for-likes increased 8.9%.

Kristiansen said getting the product right and constantly refreshing its best-selling lines because of its “super-fast supply chain” helped keep the tills ringing.

Full price sales jumped five percentage points over the period. Kristiansen said its strategy of expanding its price architecture had “worked well”. The retailer has made its entry price points “more aggressive” but had added more premium products with higher price points to its range.

He said that average transaction values had increased over the period.

New Look’s online sales soared 39.2% and own website sales jumped 28%, but Kristiansen insisted its retail business was still in growth in excess of 8%.

Kristiansen said New Look was still eyeing new space in the UK, where it has 610 stores. “If there’s an opportunity to get an additional store on Oxford Street or Covent Garden that’s what we’d do,” he said.

Despite the improvement in performance, Kristiansen said he was not planning an IPO. “I don’t see it happening in the imminent future,” he said.