980 jobs at risk at New Look, as 60 stores may shut following CVA

London - New Look is the latest high street retailer to succumb to difficult trading conditions, as the fashion brand confirms its application for a Company Voluntary Agreement (CVA). The struggling retailer may close as many as 60 stores across the UK, putting 980 jobs at risk.

The fast-fashion retailer instigated a CVA to protect its business from going under, as it seeks approval from creditors on a plan to improve its overall operational performance by shaking up its business. According to New Look’s CVA proposal, 60 of the high street retailer’s 593 UK stores are earmarked for potential closure, in addition to 6 further sites which are sublet at the moment to third parties. New Look’s proposal also includes a reduction in rental costs and revised lease terms across all its 393 UK stores.

60 New Look stores earmarked for potential closure under CVA

New Look has acknowledged that under the CVA proposal a number of redundancies will likely be made from the stores earmarked for potential closure. A maximum of 980 employees working in the stores may be made redundant from New Look’s current UK staff base of 15,300 workers. However, the high street retailer stresses that it will do its best to “redeploy colleagues within the business where possible.”

“Given our challenged trading performance and over-rented UK store estate, we are having to take tough but necessary actions to reduce our fixed cost base and restore long-term profitability,” said Alistair McGeorge, Executive Chairman of New Look in a statement. “We have held constructive discussions with our key landlords and strategic partners and will now seek creditor approval on our CVA proposal. A priority for us is to keep all potentially affected colleagues informed during this difficult time.”

The high street retailer has asked its creditors to approve of the proposal by March 21. All of its UK stores will remain open and trade as normal during the timeframe and its online platform is to remain unaffected by the proposed changes. Daniel Butters and Neville Kahn of Deloitte LLP, the business advisory firm, have been appointed as Nominees to the CVA.

“The retail trading environment in the UK remains extremely challenging, driven by weaker consumer confidence, the implications of Brexit and competition from online channels,” added Daniel Butters, Partner at Deloitte. “New Look is an iconic brand on the high street and the CVA will provide a stable platform upon which Management’s turnaround plan can be delivered…It is important to stress that no stores will close on day one, and employees, suppliers and business rates will continue to be paid on time and in full.”

“These situations are never easy as landlords need to take into consideration the impact on their investors, including those protecting pensioners’ savings, as they vote on the CVA proposal," said Stephanie Pollitt, Assistant Director (Real Estate) at the British Property Federation (BPF). “New Look and Deloitte, however, have demonstrated best practice, constructively engaging with the BPF early in the process and ensuring landlords’ interests have been properly taken into account. Ultimately, it will be for individual landlords to decide how they will vote on the CVA, but the proposal has sought to find a solution that works for all parties.”

Photo credit: By Eastgate Basildon (Own work) [CC BY-SA 3.0 ( https://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons